With shares of Green Mountain Coffee Roasters (NASDAQ:GMCR) trading around $73, is GMCR an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Green Mountain Coffee Roasters is engaged in the specialty coffee and coffee maker businesses. The company roasts Arabica bean coffees, including single-origin, Fair Trade Certified, certified organic, flavored, limited edition and blends offered in K-Cup portion packs, whole bean and ground coffee selections. It also offers other specialty beverages, including tea, hot apple cider and hot cocoa also offered in K-Cup portion packs. The coffee and relative drink trend has been exploding over recent years. Green Mountain Coffee Roasters makes this trend as personal as possible by bringing favorite beverages to the comfort of homes and businesses. As the specialty and related beverage trend operates in full force, look for companies like Green Mountain Coffee Roasters to see rising profits.
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!T = Technicals on the Stock Chart are Strong
Green Mountain Coffee Roasters stock has seen an explosive move higher over the last several years. Just recently however, the stock suffered from negative press that scared a few investors. Today, the stock has recovered and is on path to take out previous all-time highs. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Green Mountain Coffee Roasters is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Green Mountain Coffee Roasters options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Green Mountain Coffee Roasters Options | 46.74% | 26% | 25% |
What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| June Options | Flat | Average |
| July Options | Flat | Average |
As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Increasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Green Mountain Coffee Roasters’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Green Mountain Coffee Roasters look like and more importantly, how did the markets like these numbers?
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | 50% | 6.06% | 23.68% | 24.32% |
| Revenue Growth (Y-O-Y) | 13.53% | 15.61% | 32.99% | 21.19% |
| Earnings Reaction | 27.84% | -5.35% | 27.32% | 26.52% |
Green Mountain Coffee Roasters has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have generally been very excited with Green Mountain Coffee Roasters’s recent earnings announcements.
P = Excellent Relative Performance Versus Peers and Sector
How has Green Mountain Coffee Roasters stock done relative to its peers, Starbucks (NASDAQ:SBUX), Dunkin’ Brands (NASDAQ:DNKN), McDonald’s (NYSE:MCD), and sector?
| Green Mountain Coffee Roasters | Starbucks | Dunkin’ Brands | McDonald’s | Sector | |
| Year-to-Date Return | 78.28% | 18.39% | 20.43% | 10.03% | 18.56% |
Green Mountain Coffee Roasters has been a relative performance leader, year-to-date.
Conclusion
Green Mountain Coffee Roasters brings the specialty coffee and related beverage trend home to eager consumers. The stock is now recovering from recent negative press and looks to continue its rip higher. Over the last four quarters, the company has seen rising earnings and revenue figures that have maintained investors excited about the stock. Relative to its peers and sector, Green Mountain Coffee Roasters has been a year-to-date performance leader. Look for Green Mountain Coffee Roasters to OUTPERFORM.
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