Can Green Mountain Coffee Keep It Up?

Green Mountain Coffee Roasters (NASDAQ: GMCR  ) was one of last week's biggest winners, soaring 12% and hitting a fresh 52-week high on Friday.

The company behind the Keurig single-cup coffee brewer has done an admirable job of defying the skeptics who figured that Green Mountain was done after its K-Cup patents expired last September.

It didn't happen.

Green Mountain's move higher last week was fueled largely by its addition to the Nasdaq 100 market gauge on Thursday morning. You probably couldn't tell that by eyeing the stock chart. The company that revolutionized the way that tens of millions of people consume premium coffee rose four out of five trading days last week. The one day that it dipped -- Thursday -- just happened to be the day that it went into the widely tracked index. However, ever since the news was released at the end of the prior week, it's easy to see investors scrambling to buy in ahead of the move.

It's not Green Mountain's first time in the club. It was added to the Nasdaq 100 two years ago, only to get booted toward the end of last year as its stock began to slip on weakening sales, accounting questions, and the patent situation.

Then again, appreciating to the point where it's now back in the index isn't the real story. How did Green Mountain get here?

Well, growth will silence any skeptics, and that's exactly what Green Mountain has done. 

Skeptics who figured that Starbucks would crush Green Mountain with its own machine or begin making off-patent K-Cups fell short on both counts. Verismo hasn't slowed Keurig, and Starbucks actually expanded and extended its partnership with Keurig instead of moving away from the platform.

Another factor in the redemptive return of Green Mountain to the Nasdaq 100 is that it has done nothing but beat Wall Street's profit targets over the past year.

Quarter 

EPS est.

EPS

Surprise

Q4 2012

$0.48

$0.64

33%

Q1 2013

$0.65

$0.76

17%

Q2 2013

$0.74

$0.93

26%

Q3 2013

$0.77

$0.82

7%

Source: Yahoo! Finance.

Then we get to the buzz being generated ahead of the company's first ever Investor Day slated for two weeks from now. 

"We see opportunity in juices, carbonated beverages, sports drinks and enhanced waters," Green Mountain said during this summer's quarterly earnings call, and we may get some news on that front come Sept. 10.

Yes, Green Mountain is apparently confident enough about what it will be able to show investors that it's willing to share that day with the likely iPhone 5S announcement.

It's unlikely that Green Mountain will be able to dominate any of these areas the way that it does warm brewed beverages. It doesn't have to. Just the mention of carbonated beverages has kept niche leader SodaStream under pressure in recent weeks, and there are plenty of energy drink players that will be watching to see if the company does have a cheaper and more convenient way to energize consumers.

There's a lot riding on what will happen in two weeks, and that can always include getting booted from the Nasdaq 100 if things don't play out well.

There's a greater energy source than caffeine
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2609339, ~/Articles/ArticleHandler.aspx, 11/26/2014 3:36:03 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement