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Starbucks (NASDAQ: SBUX ) and Green Mountain Coffee Roasters (UNKNOWN: GMCR.DL ) just can't keep their hands off each other. Yesterday, Starbucks and the specialty coffee company announced they would expand a partnership to make and sell Starbucks and Tazo-branded single serve packs for use in Green Mountain's popular Keurig brewing system. The new agreement is for a minimum of five years.
Green Mountain's stock climbed more than 13% on the news in after-hours trading. And why shouldn't it? Having Starbucks' support should help Green Mountain as it establishes a foothold in international markets, where the single-serve category is just starting to catch on.
Shares of Green Mountain have rebounded spectacularly since March of last year, when Starbucks released its Verismo single-cup coffee system. At the time, analysts, including myself, worried that Starbucks' new single-serve machine would compete with the Keurig brewer.
Today, however, the ongoing partnership of the two companies is giving investors renewed hope that Green Mountain stock can climb back to the top. And the stock seems to be doing just that -- shares of Green Mountain have gained more than 48% so far this year. Who knows ... maybe Starbucks is setting the scene for a very green acquisition.
Does the stock have more room to run?
With Green Mountain showing signs of a turnaround, many investors are wondering whether this is the perfect entry point for an enormous rebound. You can find our recommendation for how to play the company in our 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.