My Rising Stars portfolio celebrates socially responsible investing. So why did I choose benevolent shoemaker Timberland
After all, Green Mountain Coffee Roasters has racked up years of appearances on the "100 Best Corporate Citizens" list (compiled first by Business Ethics, then CRO and Corporate Responsibility Magazine). Back in 2006, it was even named the best corporate citizen, beating out Timberland, which came in at No. 6. In 2007, Green Mountain became the first company to earn the list's top spot for two years running.
Subsequent changes to the annual list's methodology meant that Green Mountain dropped off the list for a while. This year, it returned at the No. 39 mark, and ranked within the top 10 in the food and beverage category.
Green Mountain's obviously much more than the company behind Keurig's single-cup brewers, or a major rival to Starbucks
But for all its admirably far-sighted policies, Green Mountain's success as an investment may be far less sustainable. Over the years, I've been bearish on Green Mountain not only for its generally high valuations, but also because the company's acquisitive nature made its financial statements difficult to read. (Simple, easily understood investments provide a great way to stay out of trouble in the stock market.)
Worse yet, the company's sparkling image may not extend to the cleanliness of its accounting. The Securities & Exchange Commission recently started an inquiry into Green Mountain, apparently concerned about how the company books its revenue. Although the company hasn't been charged with anything, even the possibility of some sort of impropriety should encourage investors to pass on Green Mountain for now.
Environmental initiatives are great, but responsible investors should focus first and foremost on the quality of a business and its operations. If today's small concerns become tomorrow's major problems, unwary investors could suffer. That's why Green Mountain didn't make the first cut for my Rising Stars portfolio.
Peet's Coffee & Tea is a Motley Fool Big Short short-sale recommendation. Green Mountain Coffee Roasters is a Motley Fool Rule Breakers pick. Starbucks is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.
Alyce Lomax owns shares of Starbucks. 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 Fool has a disclosure policy.
More from The Motley Fool
Starbucks Earnings: What to Watch
Starbucks investors will look at profits, comparable-store sales growth, and China.
Starbucks Corporation's Best Days Are Behind It. Here's Why, and What It Means for Investors
There's nothing wrong with the company per se, but these three factors are working against the stock.
1 Dividend Stock to Buy and Hold for Life
Starbucks may no longer be the growth engine it once was, but it’s still a solid choice for investors in search of a stable business with attractive dividend prospects.