How long can you go before considering buying in GMCR? Right now the market keeps posting new ways to avoid this stock after last week. As we all know, fear drives the market- The key is to look for panic extremes outlined by the Titan investor Jim Rogers.
Ask yourself a question of whether or not you see Green Mountain thriving, surviving, or dying in the market five-ten years from now. It doesn't really matter how great of a price you buy into Green Mountain if the price keeps slowly and painfully declining until bankruptcy. It does matter if you buy when the company is at its most vulnerable and most likely to succeed.
Think about it- People are addicted to coffee. It's not going away. Yes, Green Mountain will have a large chunk of their market growth taken out by Starbucks and anyone else who wants to make a k-cup this year. Investors were just naive enough to think that this growth stock was worth the astronomical amount last year. If there wasn't this huge increase in a short growth spurt and a lift off in the stock price, there wouldn't be a story here. The fact that the stock came crashing down is enough to make a compelling story and lure investors away from a company that has lost 75% of its value over some short months. Hey, if a company lost that much there must be something catastrophically wrong with it- wrong. This is not Enron. People need coffee to survive (yes, survive), not trading oil futures. Green Mountain will be there to innovate and supply those people who do not want the expensive, same quality brewing that Starbucks offers. If you don't believe me go into any office and find the Keurig (Vue or whatever else they come up with) filled with the cheap, easy Green Mountain branded k-cups two years from now.
Two years from now no one will remember the GMCR crash, it will go back to above 12 forward p/e, and be fairly valued just like it should.
And go ahead. Let the commenter come who think that I know nothing and you know everything.