Thursday, March 1, 2012

LIZ vs SODA

Both Liz Claiborne (LIZ) and SodaStream (SODA) reported earnings (see previous post on SODA earnings) prior to the open on Wednesday that disappointed the street with both stocks dropping dramatically for the day.

Liz Claiborne reported earnings that generally met estimates, but with the stock around 52 week highs it wasn't too surprising to see a dip with the company not beating estimates. SodaStream easily surpassed estimates and guided much higher on '12 numbers. LIZ dropped 6%, SODA dropped 14%.

A strange thing happened during trading today. Liz Claiborne turned around and soared 13.5% to new 52 week highs over $11. The stock is now ahead roughly 7% since earnings. SodaStream though fizzled as the day moved along and ended slightly down for the day leaving investors hanging onto a nearly 15% loss now.

What gives? SodaStream keeps growing at a fast clip and trades at very cheap forward PE compared to it's 35% earnings growth for 2012. Liz Claiborne on the other hand is a turnaround story with a promising outcome in the next couple years. That company is back into growth mode and has several valuable brands that each could end of worth more than the current $1.3B market cap.

Honestly the market is a confusing place. Both companies offered great valuations for different reasons. Sometimes you just have to go with the punches and take advantage of what the market gives you. Neither move made much sense, but that is how the market works in the short term.

Look to snap up SodaStream on the dips and just keep holding onto Liz Claiborne as it completes the turn around story.


Disclosure: Long LIZ and SODA. Please review the disclaimer page for more details. 



2 comments:

GVT said...

LIZ got an upgrade today

Mark Holder said...

SODA had a bunch of bullish analyst comments. Neither move was logical.