A Caffeinated View of Green Mountain

Green Mountain Coffee Roasters (Nasdaq: GMCR  ) may be in a better position than you think as it heads into next week's quarterly report.

Market researcher SymphonyIRI Group is estimating that coffee sales climbed 19% to $4.5 billion in the 52 weeks ending on Dec. 25. This, in of itself, isn't necessarily an impressive number to those who have seen Green Mountain's torrid growth rate over the years. However, that figure includes ground coffee (which still accounts for nearly two-thirds of the market) and the slower-growing instant coffee category. Single-cup servings -- the niche that Green Mountain's Keurig dominates with its K-Cup portion packs -- climbed to 11% of the market after more than doubling in 2011.

This report shouldn't be reason alone to jump on Green Mountain before it reports a week from tomorrow.

The SymphonyIRI report doesn't track all retailers. The data are also for an entire year, so there's always the chance that Keurig refill sales slowed during the holiday quarter as some bearish analysts believe.

However, it does provide a healthy contrast to what some worrywarts have been saying. Stifel Nicolaus analyst Mark Astrachan issued a bearish note on Green Mountain after an uninspiring channel check in early December.

Despite the near-term model concerns and fears of the K-Cup patent expirations later this year, expectations remain high for Green Mountain. The pros see revenue soaring nearly 85% to top $1 billion. Analysts see Green Mountain earning $0.36 a share, a target that has remained largely unchanged over the past few months despite the occasionally bearish missive.

There are a few reasons to get excited here. Dunkin' Brands (Nasdaq: DNKN  ) began offering Dunkin' Donuts K-Cups during the summer, and this will be the first complete quarter of availability. More importantly, Starbucks (Nasdaq: SBUX  ) began rolling out K-Cups in November.

The long-term concerns may remain, but we seem to be heading into a strong holiday quarter next week.

Shares of Green Mountain have popped fivefold since I originally recommended the java heavy to Rule Breakers subscribers three years ago. It's clearly been a big winner for the growth stock newsletter service, but if you want to discover the newsletter service's next rule-breaking multibagger, a free report tells all. Check it out before it's gone.