may have the best chart I've seen in a while.
The shares shattered a 17-month resistance level at the $45
level (blue line below) this month. What's even more impressive
was the volume during the breakout.
Volume measures investor interest. A stock moving through a
resistance zone on better-than-average volume is a sign that
buyers are very interested in owning the shares. The high volume
also indicates that this buyer motivation is likely to persist,
causing the shares to rise for an extended period.
This chart shows the price of
shares along with a previous resistance level to
SodaStream is a misunderstood company. That's why it fell by
so much in 2011.
Investors were concerned that household penetration was becoming
saturated. So growth would slow. Also, 80% of the company's
business is overseas and a majority of those sales are European
based. So the economic slowdown that spread across Europe last
year didn't help investors overcome their fear of buying SODA.
However, this company offers more than just a product to European
households. Analysts often miss the benefit of SodaStream moving
SodaStream offers restaurants a device that can turn tap water
into sparkling water. And water with gas is very popular in
Europe. Moreover, SodaStream's device also purifies the water
before adding carbon dioxide. So it saves restaurants money,
storage and makes water safer to drink.
A few weeks ago, I was skeptical about this company. And the
product remains of no use to me. However, after looking into
their client relationships - which have greatly expanded - and
re-reviewing the product, I'm a believer.
This is a jumpy stock. And there will certainly be bumps in the
price along the way. But SODA looks ready to rally higher this
year, possibly to as high as $65.
Equities mentioned in this article: SODA
Positions held in companies mentioned above: