Sodastream International Ltd (SODA), Intuitive Surgical, Inc. (ISRG): A Regular Fool’s Retirement Portfolio – Razors, Bubbles and Robot Doctors

Page 1 of 2

I’ve identified a handful of companies that use the so-called “razor and blades” model to deliver predictable, long-term results. Some are just starting, some have a sustained record of success. But all of them are part of my retirement portfolio, which means I’m hoping to hold them forever. Go here to see how I’m doing. Will you learn more from my successes or my inevitable mistakes?

Sodastream International Ltd (NASDAQ:SODA)Razors and blades: The secret to sustained success

The disposable razor was invented in the early 1900′s, but it was King Camp Gillette’s competitors that were first willing to lose money on the razors to make money on the blades years later, when Gillette lost patent protection. Over a century later this strategy is assigned to any company that counts on sustained revenue generated by something required to use the item purchased. And while in many cases the company still makes plenty of money on the “razor,” it’s still the “blade” that, as an investor, holds the key.

Bubbles, syrup, and the power of convenience

Consumption of soda in the U.S has been on a slow decline for several years. And while international expansion remains a decent opportunity for companies like The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NYSE:PEP), I like Sodastream International Ltd (NASDAQ:SODA)’s potential far more. As Amazon.com, Inc. (NASDAQ:AMZN) has shown us, the ease of being able to pick out items and have them delivered to your door is a powerful advantage, and I see a similar benefit in the convenience of home-based systems like Sodastream International Ltd (NASDAQ:SODA).

And while it’s not the same as clicking your mouse and opening a box the next day, not having to lug heavy bottles of soda home from the store, or take up room in the pantry, the convenience of adding syrup and bubbles to your own filtered water at home is a powerful draw for many people (myself included).

The company has grown significantly since it went public, indicating plenty of people see the value. And while the share price has really gone up this year, the company still looks to be relatively affordable, if you know what to look for:



SODA Forward PE Ratio data by YCharts

Valuation metrics require context. Shares of Sodastream International Ltd (NASDAQ:SODA) are up over 50% YTD. But as you can see above, its forward PE valuation is well within the range of several other fast-growing, profitable companies. But as with any investment, there is risk to consider.

Beware the gorilla

The two biggest risks to Sodastream International Ltd (NASDAQ:SODA) are related to the giants in the soda biz. First, consumer adoption. The company must continue to attract customers away from other brands, and it may be a challenge to attract those that are loyal to a certain beverage. On the other end of the market, those that buy store-brand sodas may balk at spending $79 or more on a machine to take home. Simply put, the company has to continue to attract consumers in the middle.

Additionally, there is a chance that, if the company continues to take market share, The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NYSE:PEP) or Dr Pepper Snapple Group Inc. (NYSE:DPS) will either enter the home game or attempt to acquire the company. While I think the latter is a more likely scenario, the former is a consideration. For either to become a reality, there will need to be a lot of growth first. I’m betting that there will be.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!