April 2009 - My Best Penny Stock - Jamba Juice

This is a new segment that i will post monthly ( Best Penny Stock For the month )

Jamba Juice - JMBA .43 a share As of 3/26 - target Price .75 a Share By Sept. 2009

Jamba, Inc. serves as a holding company for its wholly owned subsidiary, Jamba Juice Company (collectively, Jamba or the Company), which owns and franchises Jamba Juice stores. The Company is engaged in retailing blended-to-order fruit smoothies, squeezed-to-order juices blended beverages and healthy snacks using the Jamba brand. Jamba’s blended beverages are available in three sizes: Sixteen 16 ounces), Original (24 ounces) and Power (30 ounces). Most of Jamba’s stores carry a limited supply of related merchandise, including books and smallwares. The Company sells jambacards to its customers in retail stores and through its Website. As of January 1, 2008, Jamba had 707 stores, of which 501 were Company-owned (Company Stores) and 206 were franchisee-owned, 373 Company stores are located in California while one franchise store can be found in the Bahamas.The partnership with Nestle and the launch of the new in-store beverage lineup will be a shot in the earnings arm over the next couple of years. JMBA is definitely beaten down since its IPO. But on multiple metrics it is clearly undervalued. I expect that over 2 or so years, it will outperform the market. JMBA has significant growth opportunities.Poor Jamba. They've had a tough time in 2008/2009 with the credit crisis hitting California so roughly, impacting the key market for these delicious and mostly healthy treats. I had my first wheat grass shot at Jamba, which took a lot of trust for me! Jamba has a wide selection of products for most everyone, and this selection is 1) broader with new breakfast products and 2) soon to be more widely available as packaged goods with Jamba's venture with Nestle. Nestle is a powerhouse... they've got much, much more than the Nestle Crunch (a Halloween favorite). Importantly, Nestle has access to a variety of distribution channels, which may give Jambe the edge it needs is the abundant health foods market. The major risk to Jamba is rising input prices as food commodities experience rising prices due to increased global demand. If management can keep the growth trajectory balanced (and they are holding back new store growth during the 2008/2009 crunch), this looks like a great story for several years to come.summer is almost here, and with the possibility of big tax returns that means more disposable income to spend on goods and services .Jamba's distribution partnership with Nestle should over a healthy boost to the top line and lift the company's brand. Their new breakfast menu will produce more revenue from each location. Now trading at roughly 0.3x sales, it's a compelling value with a great deal of growth left. Any decline in record agricultural commodity prices should help on the cost side. The board owns over 10% of the company and is properly motivated to get the stock moving upwards again.Jamba Juice is a major bargain at these prices. They have no debt on their balance sheet but their costs are kind of out of control. If they some how manage to get their costs down and their margin up, we'll definitely see $10 per share. Great smoothie business with intrinsic value in its stores.