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A Strong Cup of Coffee

February 26, 2017 / By / ,
Stock (Symbol) Stock Price

Green Mountain Coffee (GMCR)

$40
Data is as of Expected to Report Sector

February 25, 2011

Apr 24

Food & Necessities
Sharek’s Take
David SharekGreen Mountain is a strong company right now. Profits have doubled in each of the last two quarters and when I look ahead, profit growth looks solid as far as the eye can see.

Patents on the Keurig K-cup are going to expire next year, but GMCR has built a solid lead on the competition with 85% of the single-serve market. Starbucks has hinted it will take on Green Mountain head-to-head and thinking it can compete. Starbucks “has a fantastic opportunity to introduce and deliver new single-serve coffee innovations to out customers” — Businessweek.  I doubt it, Starbucks is two-thousand-late. By the time they get their stuff together the industry will be mature and the money will have been made.
One-Year Chart
GMCR broke out to all-time highs after announcing earnings last quarter. I think investors weren’t expecting much because in a prior quarter the stock dropped after earnings.

Overall the estimated Long Term Growth Rate of 30% is super. P/E of 33 is good when you consider how rapidly profits have been growing — and are expected to grow at. 90% and 63% profit growth is expected the next two quarters — strong coffee.
Earnings Table
Profits doubled last quarter as sales rose 65%. Sales rose 68% two quarters ago.

Green Mountain only beat by a penny, I think the stock went up because it upped guidance.

2011 profits are expected to climb 76% from $0.70 to $1.23. Annual Profit Estimates increased, but not anything to brag about. I can’t see to 2013 as analysts haven’t come out with that year’s earnings estimates yet.

The next four quarters look fantastic — that’s why GMCR is a strong cup of coffee. NxtQtrsEst increased but the others stayed the same.
Fair Value
I bought up GMCR’s fair value from 35 times earnings to 40. Everything looks solid. This $40 is worth $49 (not much upside, which explains why the stock hasn’t moved higher). 2012 fair value gives huge upside.
Ten-Year Chart
I was lucky to get GMCR in February 2009 at the beginning of this huge run. We were still in a bear market and GMCR had the best numbers of any stock on my radar. Note profit growth (bottom) the last five years has been exceptional.
Power Ranking Bottom Line
Growth Portfolio 

8 of 22
GMCR is currently ranked 8th in the 22 stock Growth Portfolio Power Rankings. The numbers look great but GMCR’s P/E of 33 is slightly high and will prevent the stock from bolting higher until later in the year.

This stock is the 5th best stock in the 10 stock Aggressive Growth Portfolio Power Rankings. Quarterly profit growth has been and looks to continue to be strong — those are the prime factors to look for in this portfolio.

Aggressive Growth Portfolio 

5 of 10

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