Everyone is selling, the charts are red, but should you panic? Not at all. As a long term investor, my favorite time of the economic cycle is when great stocks sell at an unjustified discount. Today I want to bring to light the market’s darling – SodaStream International Ltd. Looking at its size, financial health and track record, I believe there’s an opportunity with SodaStream International during these volatile times. Check out our latest analysis for SodaStream International
SodaStream International Ltd., together with its subsidiaries, manufactures, distributes, and sells home beverage carbonation systems. SodaStream International was started in 1903 and with the company’s market cap sitting at US$2.03b, it falls under the mid-cap stocks category. Bear market volatility can have a short-term impact on large, well-established companies, but in the long-run, these businesses are likely to prevail. This is because fundamentally, nothing has changed. A fall in share price is hardly detrimental to its financial health and business operations. So, large-cap stocks are a safe bet to buy more of when the stock market is selling off.
Having high levels of debt can put pressure on companies during downturns since they have to continuously service their debt payments and interest costs. This means they need to maintain enough cash-on-hand for these expenses as well as maintain a cash cushion for unforeseen circumstances, which can get costly. In SodaStream International’s case, they have no debt on the books, which eliminates short-term debt pressures highly-levered companies may face. Its cash and short-term investment is also sufficient to cover other upcoming liabilities, which means SODA is financially robust in the face of a volatile market.
SODA’s year-on-year earnings growth has been positive over the past five years, with an average annual growth rate of 8.73%, outpacing the It has also returned an ROE of 14.65% recently, above the industry return of 13.03%. SodaStream International’s strong performance over time is a demonstration of its ability to grow through cycles, raising my confidence in the company as a long-term investment.
Next Steps:Based on these three factors, SODA makes for a strong long-term investment in the face of a fickle stock market. If you’re a risk averse investor, lining your portfolio with proven companies you’re willing to buy more and more of as the price falls, is a good strategy to build your wealth over the long run. This is the beginning of your research, but before you decide to buy SODA, I highly urge you to understand more about the company, in particular, in these following areas:
- Future Outlook: What are well-informed industry analysts predicting for SODA’s future growth? Take a look at our free research report of analyst consensus for SODA’s outlook.
- Valuation: What is SODA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SODA is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.