Thursday, October 27, 2005

Jones Soda

First of all, I followed Neville's advice and changed the comment section so it has the word verification thing; hopefully this stops all the spamming.

Jones Soda
Before this quarter was released I was hesistant with this company because I was unsure of their Halloween promotion idea (as well as a few other things). Well it looks like the Halloween cans were a big success, but now I'm still hesistant with the company!
I read over the transcript for the conference call, and there wasn't really anything too spectacular.
Earnings per share came in at a nice rate and they managed to increase their sales with only a small increase in promotional costs (nice sign). Now I'm hesistant about Q4 and their levels of inventory. They said they can sell the inventory, but it's a good amount of inventory!

Stolk and Cue (CEO and CFO) did seem very confident about the next few months so it will be interesting to see how much sales increase and if they can have some positive cash flow.
I still think they need to diversify away from Target. They hinted that due to their Halloween success (which was quite profitable for TGT), they might have more bargaining power with Target. I rather see them spend more effort into expanding their products through more stores. They are partnered with more chains, but they could expand into the grocery business.
They just seem too Target focused.

I think they are in a great position right now, but the next quarter is going to be important. They basically came under with light revenues and now are really confident that q4 is going to be great. If it doesn't meet these high expectations it might lose some investor confidence for awhile (and analyst confidence- Kanter from Prudential seems to be waiting for expectations to come down a bit).
Long-term, I still think it's a good company. Plus, if they get listed on the Naz that would be great. Also, you have to think some of the big beverage companies are looking at Jones (Pepsi and Coke). Wouldn't this be an attractive target for a takeover? Niche brand/branding, growing sales, big fan following...

One stock on my watch list went down 5.2% today and it got my interest. It's GSH and it's a Chinese railroad company. It is kind of hard to find information on this company, but I found one decent report. I'll try to write a post about GSH in the near future.

Also, I've been giving my opinion to the head trader regarding industries/stocks based on technicals and I hit a few good ones today! Just to be on the safe side, I won't mention any names (because I don't know if they will take a position in it or not), but I picked one industry to go down and all my picks went down, so that was good. One pick actually went down over 12% today, so that was nice to see (I was picking to short).
I say: beginner's luck, but I'm trying hard to improve the streak

1 comment:

stockdiva said...

Great analysis, Alpha, on JSDA! I was pretty happy with the results overall. I will admit that I thought revenues would be a tad bit higher, but the results weren’t bad by any stretch of the imagination. Again, I’ve been following this company for years and have listened to every conference call during that time period and if you knew how much this company has grown over those years, you would be amazed.

I wonder, though, Alpha. What sort of things would you like to see in JSDA to make you buy the stock? More growth, lower turnover ratios, higher cash flow, the NASDAQ listing, what? You’ve been picking this company apart for a while, which is a good thing I might add. I wish more people would research stocks before they buy, but there’s something that’s holding you back. What is it?

Inquiring minds want to know. ;-)