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April 10, 2007

Ummm tasty: Jamba Juice

Jamba Juice (JMBA)


Finding the next "it" product is the way to make money. When investing its very important to look at your surrounding and see what people are wearing, eating and in this case drinking. I recently took a trip to New York City where I had the opportunity to try a Jamba Juice. The reason I went into this store was simply because of curiosity. I wanted to find out why people were making 1/2 hour lines. When I got to the counter I ordered probably the most delicious drink I've ever tried. The great thing about it was that I paid $9.00 for it and even better, other people were doing the same!

As I continued my research I found that Jamba Juice has been a publicly traded company since 2003. The company since then has managed to report a quarterly loss partly because of the housing slowdown (they own most of their franchises and its real estate) and because of their continued expansion to other markets in the US.

A good quarter is the catalyst that JMBA needs to drive up their stock price. By simply looking at the number of people in their stores as well as talking to the employees and hearing stories about how well business is going makes me confident that they will beat earnings this quarter and continue to do so in the coming quarters. Once the company has an actual PE, analyst will start covering the story and make recommendation to buy the stock.

Another thing that attracts me about the company is the high level of insider ownership. High level of insider ownership means that employees have a vested interest in the performance of the company so this is definetly a great thing that could drive up the stock. Also, the major institutional holdings are all Hedge Funds and in my book if Hedge Funds such as Citadel are buying up this stock, I'm a buyer.

Jamba's prodcts are simply great. Their great brands allows for a very high markup. This is a story similar to what we saw in the 90's from starbucks. They had negative earnings for their first few years, this didnt keep the stock from outperforming the s&p for years. Maybe juice will never be as popular as coffee but I am confident the company will deliver great results that will drive up the stock price.

JMBA is a great buy!

Pros:
• Total Cash per share: 1.68
• A great and recognized brands
• Margins per smoothie are very high
• Insider ownership: 16%
• All the hedge funds love the stock

Cons:
o Negative Earnings
o If it gets cold, people won't drink COLD DRINKS
o Competition from other coffee stores and juice makers
o Exposed to rising agricultural prices





To find out more information on JMBA visit the websites below, you will also be able to track the companies stock price and recent upgrades and downgrades:

Stock Price and Key Statistics.

Copyright © Eric Medina




Posted by eamed at April 10, 2007 09:10 AM

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