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SodaStream International Ltd (NASDAQ:SODA) makes a simple product, affordable countertop home-based soda machines that use tap water. Considering that the soda industry is expected to hit $315 billion in sales annually by 2015, there's a lot of money to be made in soda. Based out of Airport City, Israel, Soda Stream manufactures and markets its home beverage carbonation systems that sell from $80 to $200 depending on the unit, and it instantly turns tap water into carbonated soft drinks and sparkling waters at far less cost than store-bought sodas. And it appears as though the company has a global hit; it is selling more than 10,000 soda machines daily, can be found in over 60,000 stores in 45 counties and plans in 2013 to expand into China and India, two of the most populated countries on the planet with a combined population of over 2.5 billion. The company also plans this year to enter the Mexican and Greek markets. At this point SodaStream offers over 150 different flavor options including the usual colas, lemon-lime, and root beer flavors that the user pours in the one-liter bottle after the gas is injected and gives it a light shake to distribute the syrup. It also now has what the company is calling "soda caps," which are single use pre-measured caps that the user places on the mouth of the carbonated water bottle then presses down delivering the pre-measured syrup into the bubbling water. In 2012 the company extended its syrup line when it signed licensing agreements with Kraft Foods (NASDAQ:KRFT) for its Crystal Light, Country Time Lemonade, and Kool-Aid brand, and the Campbell Soup Company (NYSE:CPB) for its V8 Splash and V8 V-Fusion drinks.

With little U.S. advertising this home gadget has becomes quite popular and the company continues to gain momentum posting double-digit sales gains for 13 straight quarters. There are good reasons for consumers to purchase SodaStream; the soda bottles are reusable, most of the syrups have less sugar, salt and calories than store bought sodas, but the main reason is cost. People around the globe are watching their money more carefully than before, and a 12oz glass of soda with SodaStream costs roughly $.25. Considering that the average youth age 12 to 19 drinks 868 cans of soda a year a SodaStream machine at home could save a family of four a considerable amount of money.

What I am finding most interesting about SodaStream is that roughly half of its sales are coming from Western Europe yet over the past year revenue for the company increased 61% in the Americas, 33% in Western Europe, 37% in Central and Eastern Europe, Middle East, Africa and 145% in Asia/Pacific. The U.S market is the largest soda market in the world, selling about 10 billion cases per year with revenue of over $75 billion and is expected to exceed $127 billion by 2015. Even though the SodaStream products have been on U.S. shelves for a few years now the company controls only .07% of the U.S. market. That gives SodaStream a tremendous market for its product. Now add in the other markets it plans on entering and the growth potential soars. During the fourth quarter of this year's Super Bowl the company plans to kick-off its next round of marketing by introducing its product to the masses in the U.S. by way of a new advertising campaign, "The SodaStream Effect," highlighting SodaStream's sustainability benefit by showing scenes of soda bottles suddenly disappearing as people effortlessly make their own soda with SodaStream . Daniel Birnbaum, CEO of SodaStream commented about the Super Bowl ad. "Our new commercial highlights the revolutionary benefits of our technology, confronting the conventional and arguably outdated beverage industry by showing people that there is a smarter way to enjoy soda. The massive reach of this campaign will help spread this message, beginning with over 100 million viewers on Super Bowl Sunday, and will include follow-up commercials and other integrated marketing activities. Our commitment to invest in the Super Bowl is in line with our broader efforts to significantly increase our market penetration in the U.S. and globally."

SodaStream has a market cap of $952 and has a year-over-year increase of over 22%, most of it gained in the last three months, and it recently touched its previous 52-week high of $49.98, but has backed down to close on Monday January 7, at $47.09 down 3.29%. Barclays Capital began coverage on Jan. 7, issuing an overweight rating and a $55.00 target price on the stock. The company's adjusted earnings beat the Zachs Consensus Estimate of $.68 by 17% to come in at $.80 per share, driving up earnings 66.7% over last year's $.48. It also outpaced the Zachs Consensus Estimate on revenue of $102 million by $8 Million as it rose 48% over last year to reach $112.5 million. At this time Zacks has a short-term hold rating but commented the company, "… has bright prospects going forward. Solid demand, expanding strategic partnerships like with Kraft Foods Group, Inc. enhanced marketing activities, regular product innovations, accretive acquisitions and successful strategic investments will drive the stock going forward." Given that Zachs said it could not rule out an upgrade for the stock in the near term. Interestingly the bears hold 46% of the stock's available float and it would take very high volume for a number of weeks to cover the shorts, thus giving a chance for a short-cover rally.

I like SodaStream's product. I think the global cost conscious consumer of today is looking for ways to save money, and that the SodaStream machine is one of the smarter ways of cutting some costs. Plus it also cuts down on the clutter, the plastic bottles, and it gives individual family members a large variety of soda and sparkling waters to choose from. I think as more people become aware of its usage the popularity will rise. Though SodaStream has tested its 52-week high only to pull back I still think the growth potential far outweighs the risk, and this is a growth company with plenty of growth for a number of years. The question is will a big bottler step in and swoop up the company? SodaStream is a company I would watch closely and buy on the dips.

Source: SodaStream Looks To Have Big Growth Potential In 2013