Shares of Green Mountain Coffee (GMCR +4.5%) soar, tracking close to 52-week highs. John Markman...


Shares of Green Mountain Coffee (GMCR +4.5%) soar, tracking close to 52-week highs. John Markman of Markman Capital Insight Research likes the stock for technical reasons, viewing the iShares S&P MidCap 400 ETF (IJH +1.3%) (with component GMCR) as set for an upside breakout.
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  • Dominic Lombardo, CFA, FRM
    , contributor
    Comments (432) | Send Message
     
    I think investors are realizing that Stifel Nicklaus story of losing market share didn't make sense. As most know, I've warned that GMCR will have problems increasing market share due to asset scale limits.

     

    However, I disagree with Stifel Nicolaus' logic. GMCR signed the deals w/ JMSmucker, SBUX and DunkinD to increase its value.

     

    These contracts benefit GMCR two ways:
    1) despite lower unit profits, they increase volumes, and benefit the co via economies-of-scale. (also less advertising is necessary)

     

    2) the contracts are for K-cups. This increases the LT value of the Keurig.
    19 Jul 2011, 12:17 PM Reply Like
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