Old School Value Nugget Fest (Aug 21st Edition)

Pepsi Buying Sodastream: Old School Value Nugget Fest

Pepsi is buying Sodastream.

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Q2 hedge fund letters, conference, scoops etc

Here's a ballpart valuation. Looks like Pepsi is willing to pay a little bit of a premium now, to reap the rewards of the sparkling water trend.

Old School Value Nugget Fest (Aug 21st Edition)

I do have to admit that I started drinking sparkling water in order to avoid soft drinks and other unhealthy beverages.

While attending shows and other events, I witnessed people lining up to get Sodastream samples, drinks and machines.

Over the past few years, it really has turned itself around and the Piotroski scores show how the fundamentals improved dramatically.

Old School Value Nugget Fest (Aug 21st Edition) 1

Congrats if you were a shareholder. Great return on investment over the years.

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What We're Reading in the Media

Oil Industry Comment

Here's a comment from Reddit that I found insightful regarding oil prices and what goes into it. Sometimes a simple few paragraphs from someone inside the industry can provide a much better picture than all the investor presentations and analysis out there.

Nice. (I) Work for a refining company so I can answer this.

Couple things affect price at the pump beyond just how much oil is produced.

First of all oil produced =! Oil price. Oil price has gone steadily up over the past year or two despite production increasing in the US, mostly due to increasing oil demand and some oil producing states having production issues (namely Venezuela, but other nightmare countries like Libya, are suffering from reduced production because they mess up), and the Saudis and Russia reducing their production to help prices. So, oil is around $65-70 a barrel over the last couple months, contrasting the $30-50 a barrel it was in 2014/2015. When you consider that that's the main cost of your gasoline, doubling the price generally means more expensive gas.

Second, all the other stuff that goes into producing gas is always getting more expensive. Tariffs from pipelines increase every year, so prices slowly rise because of that. Overhead, electricity, etc. all tend to go up in price, meaning that over time your gallon of gas will slowly inflate in price just like everything else you buy.

Third, just because the US is producing more oil doesn't mean that that oil is being refined here. The US exports a lot of that oil because refineries here aren't really built to make money running those types of crude oil. There are different types, and to spare you a crude oil lesson, there's basically bad oil and nice oil. The shale oil the US produces is generally pretty nice oil, but refineries here in the US are set up to make the most money by running bad tar sands oil or the nasty Venezuelan oil. We've spent all this money to be able to refine the bad stuff because it's cheaper than the good stuff, so why would we run the good stuff like everyone else can? So the US producing more oil just means that oil goes elsewhere to be refined.

By and large, though, the most important factor is always supply and demand. Just because we're making more of something doesn't mean it gets cheaper, because it turns out people keep wanting more and more oil products on a global scale.

Console Prices from '77

Old School Value Nugget Fest (Aug 21st Edition)

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