Green Mountain Coffee Roasters (GMCR)
By
Michael Cintolo , Vice President of Investments and Editor of
Cabot Market Letter and
Cabot Top Ten Report From Cabot Wealth Advisory, 7/9/09
Sign up for free Cabot Wealth Advisory e-newsletter One stock I'm following closely is the #1 glamour stock in the entire market—
Green Mountain Coffee Roasters (GMCR), which we've written about a few times in recent months. For most investors, GMCR only came on their radar in late April, when the stock gapped up 37% on its first quarter earnings report. Yet the stock is actually up since that huge move, and it's still holding up well despite the market's weakness, consolidating the past five weeks.
And why not? The company has one of the most attractive razor/razor-blade business models we've ever seen, addressing a mass market as big as there is. (Coffee, tea and cocoa drinkers.) The company already owns about 6% or more of the total coffee brewer market thanks to its Keurig single-cup brewers (it varies a bit by the quarter), and I see no reason it can't get to 10%, 15%, 20% or more in the years ahead. And each brewer sold leads to an immense amount of recurring income from the K-Cups used.
One of the biggest positives in my mind is that the top two brands of at-home coffee makers (Mr. Coffee and Cuisinart) have thrown in the towel and decided to team up with Keurig to launch co-branded, K-Cup based single-cup brewers in the months. That tells me that Green Mountain's 80% share of the single-cup market is likely to last for years.
Of course, earnings are coming up around the end of the month, and if for some reason they disappoint the lofty expectations, I know GMCR can get hit. But I think, if you didn't buy any after the earnings gap because you thought it was overheated, that you can buy a little (i.e., maybe one-third or one-half of what you'd normally buy, dollar-wise) around here
and see how the stock does in the weeks to come. It's still as big a story as there is.
Editor's Note: More information about Green Mountain Coffee Roasters (GMCR) from growth stock and market timing expert Michael Cintolo can be found in his weekly newsletter Cabot Top Ten Report. The Report highlights the hottest stocks in the market—those with the best momentum—and solid numbers and fundamentals to back it up. Each week, Mike handpicks 10 stocks and brings subscribers a detailed fundamental and technical analysis, along with precise buy points, so you get in at just the right time. Plus, Mike follows the top stocks as long as the Report holds them, helping you profit every step of the way. Don't delay, get started today!
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