Green Mountain Brews Respect

Green Mountain Coffee Roasters (NASDAQ: GMCR  ) is finally getting the respect it deserves.

Lazard Capital Markets boosted its price target on the company behind the popular Keurig single-serve coffee platform yesterday. It initiated coverage of Green Mountain back in September with a buy rating and a $39 price. The stock's been on fire in recent months, and the firm has been inching its goals higher accordingly. Yesterday's move pushes Lazard's price target from $58 to $67, but don't assume that the ceiling is just a little more than 20% away. If Green Mountain's fundamentals keep improving, it's a safe bet that Lazard will continue to adjust its marks.

An item on TheFlyOnTheWall.com notes that Lazard also had kind words to say about Starbucks (NASDAQ: SBUX  ) and Chipotle Mexican Grill (NYSE: CMG  ) , lumping all three stocks as having the best upside in the restaurant sector. Lazard is sticking to its $393 price target for Chipotle, though it's raising its goal on Starbucks from $69 to $74.

One can argue that Green Mountain isn't really a restaurant stock. There are a growing number of restaurants turning to Keurig K-Cups to brew individual cups of coffee, but Green Mountain is more of an anti-retail play. Keurig offers home owners and company break rooms ways to save on blasts of Joe without having to hit up the local barista.

However, if we're going to lump all three companies in one pot, it bears pointing out that Green Mountain is the cheapest of the three even though it's growing a bit faster.

Really.

 

2013 P/E

2013 Rev. Growth

Starbucks

26.4

11.9%

Chipotle

31.2

15.5%

Green Mountain

19.4

15.9%

Source: Yahoo! Finance.

This isn't a shot at Starbucks or Chipotle. They are both stronger brands than Green Mountain's Keurig, and they haven't been hit with last year's K-Cup patent expirations and earlier accusations of iffy accounting. However, as Green Mountain leaves the past shrinking in the rearview mirror -- proving that it's a capable growth stock with sound future prospects -- the market is clearly warming up to a stock that's still trading for half of its all-time highs from two summers ago.

There's caffeinated respect in that K-Cup, and Wall Street's ready to drink it up.

This should keep you up tonight
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.


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