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Jones Soda Co. (JSDA) Message Board

  • jones_soda_rocket jones_soda_rocket Apr 6, 2007 10:54 AM Flag

    Observations on JSDA:

    Jones Soda stock has had 6 (count them) upside price gaps in just the past month. This has to be one of the most heavily demanded stocks ever and shows the insatiable desire to own this stock (and indirectly it shows the very limited supply of available shares). It appears many buyers are holding for the long run, and not just a quick profit (in the past 20 trading days, only 7 days were "down" days - absolutely phenomenal given the price rise so far). In addition:

    1) The market opportunity is HUGE. I have not even heard about this company, let alone tried their product, until last month. This tells me there are millions of people out there just like me who also have not heard about this company or tried their product. When JSDA goes into TV advertising soon, this will open the floodgates for their products and finally unleash the HUGE untapped market for them.

    2) The opportunity for JSDA is most certainly larger than the market for HANS products. The annual U.S. market for soft drinks is something like $60 billion, the market for energy drinks is but a fraction of this (and I must admit I have never tried an energy drink, and have no desire to, but for soft drinks, well... that is another story!).

    3) HANS stock rose about 100X from the beginning of its big move starting in 2003 when it went "mainstream", and which lasted 3 years to its peak in 2006. Now that JSDA is beginning its big move here in 2007 by entering the general consumer market, it may well have an equivalent (if not larger) growth trajectory.

    4) JSDA's market cap today is about 1/10th that of HANS when it reached its peak market cap in 2006. If JSDA were to grow to an equivalent size, its stock would be something like $250 per share (before any splits, of which HANS had two: a 2-for-1 and a 4-for-1).

    5) The profit margin on canned soda is about 30% higher than for bottles, thus the added profit from cans will very likely offset the increased costs of marketing, advertising, distribution, etc. (not to mention that the new contract with FIZ - a 5 year agreement - will create economies of scale, thus further margin expansion in the long run).

    6) With FIZ guaranteeing to supply 7X more cases of soda this year (compared to what JSDA sold last year), and with the shelf space increasing by 10X in the next 2 months, and with the shelf space increase going to at least 20X in 2008, there is no doubt that JSDA will sell everything that it can deliver for the foreseeable future. The company will likely have profits of at least $1 starting with 2Q 2007 and going into 2Q 2008. This gives the stock a forward PE of around 25, very reasonable for a company that will be growing well over 200%/year for the next 3+ years.

    7) Analysts perpetually low-balled HANS earnings as they continually had to readjust their numbers. Estimates are likely to increase at a faster pace once JSDA has 1 or 2 solid quarters under its belt.

    8) The soft drink market is a defensive play (economically speaking). If there is to be any slow down in the economy, this will be a much better investment area than most others. It will "weather the storm" if one should arise.

    9) Many investors missed the boat on HANS (myself included). This is less likely to happen again with today's investors in JSDA. They won't easily forget the lesson from HANS, especially when seeing the close parallels between these two companies. Sellers will be more reluctant to give up their shares, thus JSDA will carry a much higher valuation compared to the norm.

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JSDA
0.43+0.0050(+1.18%)Sep 30 2:36 PMEDT