Green Mountain Coffee Roasters (NASDAQ: GMCR) provides
specialty coffee products to more than 7,000 wholesale customers, under the brand names Green Mountain Coffee Roasters, Newman's Own Organics and Keurig. The customer list includes supermarkets, resorts, office delivery services and convenience stores. The firm also conducts direct mail and e-commerce operations. Green Mountain has been ranked first on the Business Ethics list of "100 Best Corporate Citizens," for the past two years. Starbucks (NASDAQ: SBUX) and Procter & Gamble (NYSE: PG) are competitors.
The firm surprised investors late last month, when it announced fiscal Q1 EPS of 12 cents and revenues of $126.4 million. Analysts had been expecting 11 cents and $118 million. The CEO attributed success to the robust growth rate of Keurig brewer sales. Management also guided Q2 EPS to 19-23 cents (20 cent consensus), FY08 EPS to 72-77 cents (73 cent consensus) and FY08 revenues to about $478.4-$495.5 million ($455 million consensus).
The stock
price popped on the news and then began forming a bullish "flag" consolidation pattern. Stocks frequently exit a flag with a move in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend GMCR with one "strong buy", one "buy" and two "holds". Analysts see a 39% growth rate, through the next year. The stock's Price to Sales ratio (2.40), Sales Growth rate (51.72%) and EPS Growth rate (14.15%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 57% of the outstanding shares. Over the past 52 weeks, GMCR has traded between $18.15 and $42.96. A stop-loss of $31.85 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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