Green Mountain Coffee Offers a Great Lesson in Successful Swing Trading

[Position update below]

Green Mountain Coffee Roasters (GMCR) reported earnings Wednesday after the close. The following comments re that earnings report are from Briefing.com...

Reports Q2 (Mar) earnings of $0.50 per share, $0.14 better than the First Call consensus of $0.36; revenues rose 60.0% year/year to $193.4 mln vs. the $178.1 mln consensus. Co issues upside guidance for FY09, sees EPS of $1.47-1.53, excluding non-recurring items, vs. $1.31 consensus; sees FY09 revs of $790-805 mln vs. $722.27 mln consensus. Co says its Keurig Single-Cup brewing system drove very strong sales and earnings growth.

On its earnings call, co says:
• This was the 11th consecutive qtr with at least 39% top line growth.
• Wal-Mart (WMT) will carry Keurig's Elite B40 Single-Cup Brewer and a variety of K-Cups. This significantly expands the company's retail presence.
• Calls in-home coffee brewing a revolution.
• Results were outstanding even following the strong holiday results last qtr.
• Operating margins were much higher due to lower % for SG&A.
• For FY10, co expects to guide on its next earnings call.
• Upside from qtr was from Keurig and K-Cup sales at the retail level. Prospects for Q3 and Q4 remain very positive. Keurig was the only major brand to post such strong growth.
• Expects to expand its K-Cup production from 2 mln per week to 8 mln per week by this fall.
• Has not seen a significant production capacity investment from its key competitors, not expected to happen through the holiday season this year.
•Guidance does include Wal-Mart deal.
• In any given qtr, brewer unit growth can vary due to a number of reasons.
• Making good progress on the grocery store front, as it is currently in 3,800, but the goal is to get to 15,000 locations. This means more grocery stores and more products sold at each location. Tully's is in 5,000 locations already so that's a platform for Keurig to roll out into. Those would be all incremental locations for Keurig.
• Gross margin will not change now that Wal-Mart is a customer.

The shares closed the regular session at $52.81, and the after-hours session at $63.48, +$10.67 (higher)! And right into my projected range, expressed here. Now comes the difficult question of when, and how many shares to sell. But what a great position to be in, all the way around.

So that is how successful swing trading is done, in good or bad markets. Any questions?

Update: The news that Green Mountain Coffee Roasters will now sell its Keurig and K-Cups via Wal-Mart is a game-changer; the result is a fundamental and sudden revaluation of the company, and Wall Street's expectations. So everything ratchets higher, and the stock soars as a result.

I have not, nor will I, sell this opening gap up, which should prove to be an intermediate term breakaway gap, and not an exhaustion gap.

Full Disclosure: Still long the shares of Green Mountain Coffee Roasters.