In many respects, the economic cycle can be compared to the four seasons. When summer is in full gear everything grows nicely. When winter comes around everything goes into hibernation to await spring and summer. In today’s economy, winter has dropped and many companies are hibernating. Many, however, are sowing their seeds to come back strong after a slow winter. The company that can plan through the winter months will most likely come out growing in the spring and find plenty of profit.
Jamba Inc., through its wholly owned subsidiary Jamba Juices Inc., is an owner and franchiser of custom-made juice drinks. The company offers custom blended “Smoothie” and juice drinks primarily in California but also across eight Western States. It currently owns 517 stores and franchises 206.
Even though quarterly sales of the company have been somewhat uneven, based on the larger concentration of company stores in California, there is underlying strength within the company’s growth opportunities. Sales were off in other states to a small degree but more so in California, where the declining U.S. economy has impacted the discretionary spending nature of the drink and housing markets. The company, however, has been following a stable and predictable path toward stable growth. It has also been active to mitigate its current situation through a streamlining of non-store employees, slowing new store growth and instituting new product offerings of ready-to-drink products with Nestle SA.
Working from a weak economy, the company appears to be moving forward to build its base with a strong partner. As a domestic economy slows, taking advantage of a rebound is a wise move. Although current revenues have been off slightly, there is no fundamental reason why Jamba Juices Inc. should not rebound along with the U.S. economy. In many respects, the company could be considered a solid buy as it readies for strong future growth with a reasonable stock price.
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