Avoid This Stock Like Bad Coffee

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Submitted by TSIF
Member Rating 99.91
Submitted On 5/2/2011
Stock Price at Recommendation $3.24


Star Rating *
Headquarters Beverly Hills, Calif.
Industry Packaged foods and meats
Market Cap $137 million
Industry Peers

Caribou Coffee (Nasdaq: CBOU  )

Green Mountain Coffee Roasters (Nasdaq: GMCR  )

Peet's Coffee & Tea (Nasdaq: PEET  )

Source: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.

This Week's Pitch:
I've seen some of the "Coffee" sellers really benefit over the last few years from America's habit and quest for convenience. Besides [Starbucks (Nasdaq: SBUX  ) ] and Dunkin Donuts, we have the rise of the K-Cups and other "quick fixes". Despite the historical data on the success of this multi-billion industry, Jammin Java Corp is extremely OVER Caffinated at these levels. In fact, I wouldn't give you the cost of a single K-Cup for a share.

Jammin Java Corp is an OB stock that has just enough press releases to seem legit, but at WHAT VALUATION, or do speculators...errr...I mean investors really care or know how to value a company. Hint don't go from $2 per share to $3.20 in five days, (we'll get back to how you were even at $2 per share in a moment), just because you sold out a "limited run" of your coffee at a deal of the day on [ (Nasdaq: AMZN  ) ]. Yes, you sold something on Amazon....(don't tell anyone, but pretty much anyone can sell on Amazon...shssss), good for you, but your market cap increased by $50 Milliion because you had a limited run on Amazon???

Now back to the $2 per share before the caffination spike. Your share price has an asset value of about $0.01 per share and that's being generous. You're now at 390 times your book value.

You started as an exploratory company in Nevada to recycle electronics, decided you couldn't make it at that business and swapped some shares for rights to come coffee. You have NO employees other than management and you as of your Dec 10-Q you have less $640,739 of assets of which $640,000 is your licensing agreement. You're $54,000 in the hole with loans from your director.

I think you need to sell a lot more K-Cups to be worth your $0.01 book value, let alone the $3.00 speculation you're currently at.

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The Motley Fool is investors writing for investors. Dan Dzombak did not have a position in any of the companies mentioned in this article. Pitches must be compelling, made in the past 30 days, and be at least 400 words. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters and Starbucks. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters. Motley Fool newsletter services have recommended shorting Peet's Coffee & Tea and Green Mountain Coffee Roasters. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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