Shares of Keurig Green Mountain (UNKNOWN:GMCR.DL) jumped big today after Coca-Cola announced it would increase its stake in the at-home coffee brewer. Back in February, the beverage giant had agreed to a deal that gave it a 10% stake in Keurig, with the opportunity to increase that amount to 16%. Today, Coke announced that it would take that deal.
In today's "Stock of the Day," Motley Fool analyst Jason Moser says this is a great announcement for Keurig since it's coming at a pivotal time for the company. Once upon a time, Keurig was just a coffee machine, but it's created a lot of new relationships recently with companies like Coke and Campbell Soup that have validated its business. On top of that, Coke's stake in Keurig indicates that it has a lot of faith in the future of the at-home beverage market, a niche market that Keurig is poised to take a large chunk of.
So, should investors consider buying today after Keurig's jump? Jason doesn't like the idea of buying after a 10% pop, but he does love the company's many deals and its razor-and-blade business model. At the end of the day, he thinks it's an impressive company with a lot of potential and it should stay at the top of an investor's watchlist.
Jason Moser and Mark Reeth have no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Keurig Green Mountain and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. 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.