Jamba (JMBA) Has Juice, But Is There Any Substance To It?

Shares of Jamba, Inc. (Nasdaq: JMBA) continue to see significant upside momentum and traders and investors are taking notice. The stock is up 17 percent today, 64 percent year-to-date, and 527 percent over the last year.

The operator of stores that sell healthy blended beverages and juices was left for dead during the recession, but now appears to be on the mends.

The company is undergoing a massive turnaround plan, which it claims it is making excellent progress on.

On the financial objects of its turnaround plan, the company eliminated long-term debt. The company is also expanding its business model from a made-to-order smoothie company to a healthy, active lifestyle brand. The company is also making a push to franchise into non-traditional sites, like airports and universities.

As of December 29, 2009, the company had 478 company stores, and 261 franchise stores - for a total of 739.

While the company is clearly making progress in its turnaround, it has a long history of losses. In 2008 the company lost a $149.2 million, which shrunk to $25.8 million in losses for 2009. The loss per share was $2.80 in 2008 and $0.48 in 2009. Revenues were $342.9 million in 2008, shrinking to $301.6 million in 2009.

The company has 52.7 million shares outstanding, making the market cap about $145 million. In addition, in June 2009 the company completing an offering of $35 million in convertible preferred stock. These preferred shares are convertible at the election of the holders, at any time, into shares of Common Stock at an initial conversion price of $1.15 per share.

Shares are Jamba are trading at 0.48x sales. As a comparison Caribou Coffee Company, Inc. (Nasdaq: CBOU) trades at 0.51x sales, Starbucks Corp. (Nasdaq: SBUX) trades at 1.9x sales and Panera Bread Co. (Nasdaq: PNRA) trades at 1.8x sales.

As a percent of sales, shares look favorable but all the other comparables have profits - something that has still alluded the company.

While the stock is popular among retail investors, institutional investors have also been buying the name recently. Royce & Associates disclosed a 5.86% stake in January, and is the largest holder. Other large holder include Winslow Management, which raised its stake by over 2 million shares in the latest quarter to 2.52 million shares.

The stock is only covered by one Wall Street analyst currently - Jefferies which rates shares at 'Hold'.

Fundamentally it is hard to find many reasons to buy the stock , but that hasn't stopped investors from plowing into the name on hope of a successful turnaround.

Here are reasons that could keep the momentum train in Jamba going:

• With still inefficient stores and high operating costs, an activist investor could get involved and push for a faster path to profitability.
  
• More sell side analysts could pick up coverage of the stock as its turnaround progresses.
  
• Investors could continue to buy into the annual meeting on May 20, 2010

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