Green Mountain Coffee Roasters: How High Can It Climb?

| About: Keurig Green (GMCR)

One of the fastest growing Nasdaq 100 stocks on Barchart has been Green Mountain Coffee Roasters (NASDAQ:GMCR), which has been up over 248% in the last year. The company markets and distributes coffee using its K-Cup portion packs and acquired Keuring brewing systems under not only its own brand name but also under Newman's Own. The company even distributes Starbucks (NASDAQ:SBUX) and Dunkin Donuts (NASDAQ:DNKN) brands. Agreements with Breville, Cuisinart and Mr Coffee have also increased sales.

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Green Mountain Coffee Roasters operates in the specialty coffee industry in the United States and internationally. It sells approximately 200 whole bean and ground coffee selections, cocoa, teas and coffees. The company offers Arabica bean coffee, including single-origin, Fair Trade Certified, organic, flavored, limited edition, and proprietary blends under the Green Mountain Coffee, Tully’s Coffee, and Newman’s Own Organics brand names. It also manufactures gourmet single-cup brewing systems and markets its patented single-cup coffee and tea brewing systems for offices and homes under the Keurig brand name. The company provides cocoa, teas and coffees in K-Cup portion packs, Keurig single-cup brewers, and other accessories. It sells whole bean and ground coffee, K-Cups, Keurig single-cup brewers, and other accessories in domestic wholesale and retail channels, and directly to consumers. The company markets coffee, tea, cocoa and single-cup brewers to retailers such as department stores and club stores, and single-cup brewers to distributors as well as to supermarkets. Green Mountain Coffee Roasters, Inc. was founded in 1981 and is headquartered in Waterbury, Vermont.

Factors to Consider

Barchart Technical Indicators

  • 100% Barchart technical buy signal
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 6 new highs and up 8.52% in the last month
  • Relative Strength Index is 74.92% and still climbing
  • Trades around 89.53 with a 50 day moving average of 76.84

Fundamental Factors

  • Wall Street brokerage analysts still have this stock on their buy darling lists.
  • Analysts have five strong buy, three buy and two hold recommendations currently published on this holding.
  • Sales projections are very aggressive with a consensus forecast of an 86.70% increase this year and another 40.90% next year.
  • Earnings expectations are out of sight with a consensus of a 111.40% increase this year, 43.90% next year and a 34.58% annual increase over the next five years.

General Investor Sentiment

  • The individual investor on Motley Fool is starting to predict that this stock will run out of steam and only 61% of the readers expressing an opinion think the stock will beat the market.
  • The more experienced All Stars are a little more optimistic with a 66% vote for the same result.

Summary: Green Mountain Coffee Roasters has seen an almost 250% increase in price in the last 12 months. With a price earnings ratio of over 50, investors expect a lot. Total sales of coffee are not going to go up 40.90% next year which is the consensus figure for the stock's increase in sales. To maintain this growth rate it will have to rob others of their market share. I advise caution. If you don't have this stock already buy just a little, not a lot. If you own it, divide your holdings and put in stop losses at several price levels to protect your profits.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.