+ Watch JMBA
on My Watchlist
The Company offers a variety of fresh blended-to-order smoothies, fresh-squeezed juices, baked goods and snacks through retail stores.
Jamba Inc is up 4X from a year ago, and pushing a two year high. One has to wonder if it's peaked or has room to grow still. Bravobevo and several other all stars picked this one as it passed the $100 pick threshold, but I hesitated doing some more DD. The pullback of this and many others Friday, (3/19/10) activated it for me at what I feel is a good entry point. There is some hesitation reaching for something that has climbed so high, especially a $2 equity that is below the radar of institutional investors. Recent focus on sugar'd drinks is leading to a fresh round of taxes and sugared drinks being pulled from schools. Jamba operates in retail stores, but offers a class of product growing in appreciation. In general over 30% of kids and 60% of adults are now considered overweight. Despite these facts, Jamba is a "tough call" for me to make. P/B which is a primary indicator for me unless a company is showing strong growth is already at an "inflated" 7.8 P/B and has had negative earnings and a negative $0.48 EPS last year. Relatively debt free, but accounts payable far exceed receivables and cash on hand, which is an important metric for me in retail. Jamba also missed on March 9th quarterly report, (only one analyst however), posting another $0.23 per share loss.Overall, as a sub $2.50 stock, I think Jamba has a chance to turn things around. I'm fairly hopeful they can, but this is clearly a long term play. Any efforts to raise additional revenue will be very detrimental as such a low share price. 2010 forcast estimates a profit in 2010 and administration costs cut by 10-12%. Jamba has reorganized their menu, expanded on colleges and entered the grocery store. A focus on juice products should help. While perhaps a little "high on the frucose" at this level, I'm still juiced up on Jamba over the long term.
Unfortunately, too much of the recent bounce was due to rumors of Starbucks buying out Jamba. These rumors haven't been confirmed or denied as of this pitch update. Howver, if not true, then Jamba is ahead of itself right now on artificial "juice". Unfortuantely, insiders who helped bail out the company during the economy rough patch are likely to sell into this if not true. My thesis was based on long term. Of course a buyout is fine at a premium, but an artificial runup on a rumor is not okay. I'll exit and reenter when more appropriate. Good luck.
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