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Jeff Reeves considers three stocks with massive short interest he thinks could go the way of...

Jeff Reeves considers three stocks with massive short interest he thinks could go the way of Sears (SHLD) very soon: Zagg (ZAGG), which Reeves says could be headed for a Green Mountain-style momentum crash; Barnes & Noble (BKS), expected to turn just a single quarterly profit in FY2012; and Sodastream (SODA), "a fad stock ready to hit a ceiling."
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Comments (3)
  • Stone Fox Capital
    , contributor
    Comments (7918) | Send Message
    if SODA is a fad it has just started. Wouldn't short at these levels.
    29 Dec 2011, 10:14 AM Reply Like
  • Josh Krause
    , contributor
    Comments (1361) | Send Message
    Can't wait for the 4Q earnings in early February. Could stand to start making money on SODA as it has been beaten constantly since June.
    29 Dec 2011, 02:28 PM Reply Like
  • rhfagin1
    , contributor
    Comments (52) | Send Message


    IMO you have no clue if you think SODA is a good short.


    I'll bet you don't drink much soda at home or if you do, you don't own a Sodastream. Everyone I know who has a bought a Sodastream loves it! No going back to buying sodas at the market!


    How many years did the street consider Keurig a fad too? Why? Because people didn't use it and did not understand it's usefulness. "Why pay so much for a cup of coffee?" - WHY? - It's the convenience stupid!


    Sodastream is sticking for the same reason (convenience) that the Keurig system has made GMCR a $6 Billion company.


    Where the Keurig makes a great cup of coffee in 1 minute, Sodastream makes a great bottle of soda in seconds and eliminates dragging all those cases of soda from the supermarket. No more storage space needed. No more going to the fridge and realize your out of soda!


    The main issue with this company is not their sales or earnings or "it's a fad". It's their guidance!! They don't know how to speak Wall St. lingo. It's a shame because just a little better (and more accurate) guidance and this company would never have been thrashed by the street.


    Look at their actual 2011 quarterly revenue growth vs. their quarterly guidance -


    Q1 - 50% growth / Guidance - FY 2011 30% growth.
    (They raised it from 25% to 30%. The street liked an upward
    adjustment. Stock price shot up.)


    Q2 - 38% growth / Guidance - FY 2011 30% growth.
    (After averaging 44% quarterly growth in the first half of 2011, they left FY 2011 growth guidance at 30%! This implied that revenue for the second half of the year would only increase 16%!!! - DOWN from the first half 2011 of 44%! The stock got creamed and justly!!)


    Q3 - 39% growth / Guidance - FY 2011 36% growth.
    (After three quarters, actual quarterly revenue growth averaged 42% yet they raised FY 2011 growth only to 36%. They issued revenue growth guidance of 24% for 4th qtr!! Way DOWN again from the prior quarters!!


    Now to see how really ridiculous this forecast is, with adding Target, Staples and Costco this quarter, 4th qtr. US sales alone should rise to euro $45 million. Even if non-US 4th qtr. non-US sales are flat (actually averaging 42% up in 2011) that would be an overall growth rate for the 4th qtr. of 60%!)


    In essence, the stock is floundering because the street is confused. Are they expecting major problems this quarter? Yet all Birnbaum's comments have been very bullish! That is what is confusing Wall St!!


    SODA is trading at @ 24 ttm. After the earnings report for the 4th qtr are in, if my analysis is correct, the multiple should be at least 40 if not higher. That translates to a price above $52.00!!


    I only hope that Birnbaum realizes how he has crippled his stock price not from actual company results, but simply because of his lame forecasting.
    31 Dec 2011, 09:53 AM Reply Like
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