Buy, Sell, or Hold Green Mountain in 2012?

Even after Green Mountain Coffee Roasters'  (Nasdaq: GMCR  ) remarkable fall from grace, Austin still doesn't recommend buying shares. Despite what appears to be a huge discount for still high growth rates, the environment Green Mountain will be operating under for the next few years will be far different from the last few. Even ignoring concerns about device saturation, management missteps, and accounting shenanigans, Green Mountain will still probably have to fend of the threat of other, cheaper coffee-pod manufacturers once its key patents expire in September.

Instead, you should look at quality, proven companies like The Motley Fool's Top Stock for 2012. It's our chief investment officer’s highest conviction pick for this year, and it may be yours, too, after reading this totally free report.

Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of Starbucks and Green Mountain Coffee Roasters. Motley Fool newsletter services recommend Green Mountain Coffee Roasters and Starbucks. 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 (4) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On July 14, 2012, at 5:23 PM, earthunit wrote:

    No thanks, I think I WILL buy much more GMCR down at these bargain prices. You can buy Einhorn's favorite if you wish - AAPL. Good luck with that one going to $1 trillion market value. LOL

  • Report this Comment On July 14, 2012, at 7:33 PM, steelers41 wrote:

    Tell me what the key patents are? The 2 that expire in September aren't even being used by GMCR anymore since the coffee sucked with those 2 patents and they found a better way to brew that doesn't expire until 2023.... Do you research FOOL

  • Report this Comment On July 15, 2012, at 7:46 AM, perho wrote:

    Austin, stand back from your slide rule a moment. Coffee is a legal and healthful addictive drug. Look at the regular daily lines in premium coffee shops. People are not about to change their fixes. GMCR, beaten down now, is a rare opportunity to capitalize on an ecosystem franchise that will not be displaced by outlet brands. Twelve million brewers is nothing compared with the growth potential for quality home brewing of the drug. GMCR's premium coffee and its business model will be revalidated rapidly, and bears will be scrambling to cover. Its founding provincial management is already being upgraded and shaping up for real world scrutiny. I just became long GMCR on Friday. Couldn’t resist buying during the panic. Expect a double (40+)by the end of 2012.

  • Report this Comment On July 16, 2012, at 3:58 PM, TurbulentTime wrote:

    Do not touch GMCR. I have similar warning for RIMM two years ago after seeing Apple's share of the market expand, and so did Samsung's cellphones. Kroger will compete with GMCR on single cup later this year, other competitor will start to jump on the wagon, do you guys, who have replied here, think that more competition ahead means better profit margin? GMCR doesn't have its own brand recognition as much as Starbucks, Caribou, Peets, McDonald's do. If Starbucks will take its contract of single serve K-cup from Green Mountain to its competitor, Krogen; that will be so disastrous to GMCR's per earning share in the future. Well, keep your bullish thoughts on GMCR if you will. That's all that I can help you guys with. Good luck.

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