After the Great Recession, consumers started focusing on brewing premium
beverages at home to save a few bucks. One popular gadget aimed at that market
is produced by SodaStream International (NASDAQ: SODA ), which provides in-home
carbonation ranging from fizzy treats to fancy alcoholic drinks. SodaStream has
been seeing big sales growth since it went public in 2010. Sales are set to jump
22% in fiscal 2011, and the company has blown away profit forecasts in each of
the last four quarters. Next up for SodaStream: A big-time partnership with the
big-name beverage brands of Crystal Light and Country Time lemonade. The stock
popped 10% in early trading Thursday as a result of the news today but is it
enough to keep SODA stock from losing its fizz like so many "fad" stocks
have done? Already, by midmorning the stocks jump was trimmed to just over 5%.
Kraft Foods (NYSE: KFT ) announced the deal with SodaStream today with its top
brands becoming available on SodaStream's in-home carbonation systems. Much
like Green Mountain Coffee (NASDAQ: GMCR ) did with its Keurig single-brew
coffee machines, SODA is relying on consumers loyal to a particular brand to
give their pricey kitchen appliances a shot. Keurig's coffee machines boast
java branded "K-Cups" of coffee by Dunkin Donuts (NASDAQ: DNKN ), Caribou
Coffee (NASDAQ: CBOU ) and even Starbucks (NASDAQ: SBUX ). Therein lies the
problem, though. While Keurig was a roaring success in previous years, there are
signs that momentum is waning and that investors are skeptical of the
company's future growth prospects. After all, after folks have one machine
they hardly need another and the brewers themselves are sold nearly at cost,
and the lion's share of profits comes from licensing the coffee-filled K-Cups
that GMCR has patented. The result is that, while Green Mountain Coffee has seen
its revenue increase five-fold since 2008 and its stock is up 10-times over in
the same period, GMCR shares are down 50% in the last six months or so. The
bears have started sharpening their claws, wondering if the fad of Keurig is
about to fade . SodaStream appears to be growing still, though it faces the same
headwinds. Consider that while 27% of outstanding Green Mountain shares are
owned by short-side traders that is, investors betting the stock will drop
Sodastream boasts an ugly 58% short interest. That means more than half the
shareholders of available SODA stock are betting against the company. Not a good
sign. Of course, the deal with Kraft could send some of those short-sellers
scurrying for the exits. Just because most people are betting against a stock
doesn't mean it can't succeed. However, the risk of trendy consumer stocks
has been chronicled many times on Wall Street. Fads like Crocs (NASDAQ: CROX )
run up and then flame out spectacularly. Will SodaStream be the next big-time
flop? Maybe. Personally I don't think Country Time and Crystal Light have the
currency to single-handedly save the stock. I have been bearish on SODA stock
for some time , and I think the fizz in shares today is probably just some short
covering as traders hedge their bets. But if SodaStream can keep offering tasty
beverages cheaply and conveniently via home-carbonation systems, it could be
around for a long time. The company is up about 18% since it started trading and
continues to post strong profits and revenue. In the end, those are the only
results that investors really care about. Jeff Reeves is the editor of
InvestorPlace.com. Write him at editor@investorplace.com , follow him on
Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook . Jeff
Reeves holds a position in Alcoa, but no other publicly traded stocks.
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