Jones Soda: Is a 93x P/E ratio 53 times too many?

Posted Dec 23rd 2006 9:14AM by Sarah Gilbert
Filed under: Television, Rants and Raves, Competitive Strategy, Jones Soda (JSDA)

I've recently become a big fan of Jones Soda Co. (NASDAQ:JSDA), as I've written about here: it has much to do with the ingredient shift away from high fructose corn syrup, but that's backed up by fundamentals, in my opinion. The company is blessed with a smart, viral marketing strategy (customers can submit photos to be featured on bottle labels, and have done so by the tens of thousands; quirky seasonal flavors inspire a wealth of priceless PR), quality products and a good position in the attractive growth market of premium non-alcoholic beverages. Customers have shown an unquenchable thirst for ever-more-expensive glitzy soft drinks, and Jones still has many grocery outlets and specialty stores to penetrate.

But last night Jim Cramer jumped on my bandwagon and recommended the stock to his viewers. Overnight the stock, with an already-heady P/E ratio of 82x earnings, jumped up to a whopping 93x.

I don't know about you. But for me, 93 times is ... a lot of times. I love growth stocks! Don't get me wrong. But 40x feels like a comfortable number to me. Fifty or 60, maybe, for a really great company with an interesting, high-growth product. That would be fine and still doable. But 93x?

I suppose, it's possible, the company may post double the profit next year, and if the stock doesn't grow much, I'd be back in my happy 40-50x range. Right now, though, 93x seems like 53 times too many. Are you buying Jones at this level?

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Reader Comments (Page 1 of 1)

12-23-2006 @ 10:36PM

Slugger said...

I bought Jones when it had a 300 p/e ratio for around 5 dollars a share. the point is that when the P/E ration finally falls to a 30 or 40 range. the Story is probably over.

12-24-2006 @ 12:04AM

alex said...

I started to buy Hanson in May of 05 and Jones in March of 06. Cramer may be an *** but look back at Polaroid and Intel (while remembering schnaple). KO buys out JSDA at .5 shares for one. Watch.

12-25-2006 @ 7:26AM

ADDAM BONGG said...

WHERE WERE ALL YOU GENIUSES WHEN I RECOMMENDED THE STOCK JSDA JONES SODA LAST SPRING IN THE AOL INVESTING CHATROOM? TODAY I'M RECOMMENDING PRLO... MERRY CHRISTMAS AND HAPPY NEW YEAR!!! GOOGLE GOOGLE GOOGLE ADDAM BONGG

1-08-2007 @ 2:50PM

Gary Stoltz said...

I've been to several locations and I just don't see the soda moving off the shelves that fast. There's too many independents and specialties fighting for shelf and box space. Have there been any figures on the sell thru of the Holiday and Desert packs done thru Target?

1-12-2007 @ 12:54PM

frank thetank said...

monster announcement yesterday. They will have 25 percent coverage of the u.s. . Deals are inked. This is a 1200% increase...my guess is that in 2 yrs time this will be a 40 dollar stock and will be acquired.

1-17-2007 @ 11:35AM

James Simms said...

Bought this stock 7+ years ago when it was only found on the Vancouver Stock Market. I paid 1.17 a share and bought 130 shares for a couple of hundred. Made the choice to just sit on this as I thought it would do something one day. My gut feeling is to sit on this for about another two years.