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Green Mountain Wants to Be Great Again

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Green Mountain Coffee Roasters (Nasdaq: GMCR  ) has been hiking back into favor these days.

Shares of the company behind the Keurig single-serve coffee system have climbed 28% in September and are actually trading more than 80% higher since hitting their summertime low.

CEO Larry Blanford was interviewed in yesterday's The Wall Street Journal, sharing his perspective on everything from David Einhorn's timely bearish bet on the company to Starbucks' (Nasdaq: SBUX  ) upcoming espresso maker.

There weren't a lot of surprises, until the end of the piece, when he discusses its own espresso-centric machine that will roll out either late this year or early next year in cahoots with Italy's Lavazza.

"It is a single-serve espresso machine with a twist or two that we think will make it very interesting to the consumer."

There is no shortage of espresso makers on the market. Starbucks and Green Mountain aren't exactly breaking new ground here. Nestle's (Nasdaq: NSRGY  ) Nespresso is the global leader, but Kraft's (NYSE: KFT  ) Tassimo and D.E Master Blenders 1753's (NASDAQOTH: DEMBF.PK) Senseo are also popular players.

The machines may be more popular in European markets, where espresso is more widely consumed than the traditional filtered coffee that made Keurig such a big hit domestically.

What will this "twist or two" be, and will it be enough to finally get folks to buy high-pressure java makers in this country?

If the twist is that it will also accept K-Cups and Vue portion packs, the consumer appeal will be obvious. Now that Green Mountain's K-Cup patents expired over the weekend, portion packs for Keurig's flagship brewer are about to get cheaper. The already impressive variety relative to other platforms is about to get even more varied.

It seems unlikely, but it would definitely be a game changer.

Either way, Blanford still sees the company growing at a 15% to 20% annualized clip in the future. It may seem lofty, but good things will obviously continue to happen for Green Mountain if he's right. The stock is fetching less than 14 times Wall Street's profit target for the fiscal year that ends next week. Green Mountain is trading for just 12 times the fiscal year that starts next month.

As long as the twists that Green Mountain experiences are positive ones -- and that's no safe bet -- the stock will continue to claw its way back.

Brew ha ha
With Green Mountain as cheap as it's ever been, many investors are wondering whether this is the end of the former market darling, or the perfect entry point for an enormous rebound. You can find our recommendation for how to play the company in our new premium research report. In it you'll find everything you need to know about Green Mountain, including whether it's a buy at today's prices. Click here for instant access.  

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

Longtime Fool contributor Rick Munarriz calls them as he brews them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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Related Tickers

12/31/1969 7:00 PM
GMCR.DL $0.00 Down +0.00 +0.00%
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Starbucks CAPS Rating: ****