Green Mountain Coffee Roasters Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Green Mountain Coffee Roasters (Nasdaq: GMCR  ) rallied for a second day as analysts offered strong support of the company's growth strategy. The stock closed up about 9% after jumping 11% in intraday trading and 13% yesterday.

So what: Both Canaccord Genuity and Janney Capital Markets analysts issued favorable remarks. Canaccord, in particular, referred to sell-through data from NPD cited in the Q4 conference call. Keurig unit sales tracked by the researcher increased 56% in the fourth quarter.

Now what: The majority of Fools tracking the stock in our Motley Fool CAPS database remain sour on Green Mountain's prospects, but you won't find me among them. I've been long Green Mountain shares in CAPS since 2006, and having tasted the new Starbucks (Nasdaq: SBUX  ) K-Cup blends, I'm more convinced than ever that this is a durable consumer franchise. Do you agree? Would you buy shares of Green Mountain Coffee Roasters at current prices? Please weigh in using the comments box below.

Interested in more information about Green Mountain Coffee Roasters? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Starbucks and Green Mountain Coffee Roasters and creating a lurking gator position in Green Mountain Coffee Roasters. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 16, 2011, at 4:58 PM, gmcr85 wrote:

    you read my mind about this stock, also i think the company is thinking like Steve jobs style easy to use, slick product , addictive, branding, i wish they use starbuck or peets cofee in there k cups, maby they do,

  • Report this Comment On November 16, 2011, at 6:37 PM, foolforloot wrote:

    I staked a claim today and I hope it flies high! If you have any advise I'm listening, Thanks

  • Report this Comment On November 16, 2011, at 8:18 PM, Rich1965 wrote:

    I'm all in. Bought at $40 last week. Everyone I know wants the K-cup machine for Christmas. I'm a S-bucks daily buyers at a store but may need too go for a machine just in case can't get there.

    Don't know details of Einhorn rap on GMCR financials so need input from fellow Fools to decide if should buy more and hold on for a multi-bagger or just sit now and sell after the holiday sales.

  • Report this Comment On November 16, 2011, at 9:39 PM, prginww wrote:

    I've been long GMCR even longer than you -- since 2004. And I'm long on HANS as well -- can you find two bigger long-term winners?

  • Report this Comment On November 17, 2011, at 3:42 PM, Davidbegone wrote:

    I've followed GMCR for years, from a start up in Waterbury VT to what they are today. I've listen to their quarterly reports and read the daily blogs from the Talking Heads. I'm just a simple guy from VT and know little about the high finance of market manipulation. But this simple guy wonders how the Talking Head Shorts can successfully trash a company like GMCR with little detail backing up their implied "detailed investigation of the facts".

    Two facts the Talking Head Shorts flaunted: GMCR's Low Level of Free Cash Flow and Building Inventories.

    I wonder if any of the Trash Talking Shorts ever started a company that required real capital? Buying a computer and an internet connection to write a blog is not the same thing.

    Here are a few facts I think the Shorts don't want the Stockholders to understand. This understanding could undermine their ability to take the stock price down and removes their shorted gain. In other words, even good news if told in a certain way can be manipulated to sound like bad news. The Short's motive.

    GMCR's growth is real. Their year after year numbers verify this fact. Besides GMCR's own brand growth, contracts with Starbucks, Dunkin Donuts & Smucker require new production and distribution facilities. It costs millions of dollars to build and staff these facilities. Before GMCR will get paid from these contracts they need to spend money on infrastructure. Anyone who ever started a real business (not a Talking Head Blogging Business) understands these cash flow demands. So why would anyone expect anything different with the GMCR Free Cash Flow numbers? These numbers go hand and hand with any growth.

    GMCR got hammered by the Talking Head Shorts for building inventory. Did it ever occur to anyone that this inventory is needed for GMCR's biggest shipping quarter? Isn't it understood that GMCR is building new facilities to provide a rapidly growing product demand, but those facilities are not yet in full production. So how does GMCR meet that growing demand in the short term? They build inventory in every currently operating facility available to them. An why do this? The best way to really fulfill the Short's goal is to miss order fulfillment. GMCR isn't thinking Short.

    This seems pretty basic to a simple guy from VT.

    I'm Long on GMCR

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