Greener Pastures for Green Mountain
It's been an impressive run by Green Mountain Coffee Roasters (NAS: GMCR) lately.
After four consecutive trading days of strong gains, shares of the company behind the Keurig one-cup brewing system are trading 35% higher.
Last week the good news came in the form of upbeat analyst notes out of Lazard Capital Markets and Roth Capital. Introducing a Wellness Brewed line of K-Cups fortified with antioxidant vitamins and minerals also didn't hurt.
This week the catalyst has been Luigi Lavazza -- the Italian coffee giant that originally acquired a stake in Green Mountain two years ago -- boosting its stake. Lavazza and Green Mountain are teaming up to introduce a single-serve espresso maker in the U.S. later this year, so the increased ownership is an encouraging sign.
This won't necessarily be an easy market for Green Mountain to crack. Nestle's Nespresso is the top dog, but Kraft's (NYS: KFT) Tassimo and D.E Masters Blenders 1753's (NASDAQOTH: DEMBF.PK) Senseo are still in the hunt. Starbucks (NAS: SBUX) will also hit the market with its own machine later this year.
However, it could also be that Lavazza recognizes a bargain when it sees it. Despite worries of Green Mountain's K-Cup patents expiring this weekend, several analysts believe that the company will continue to grow its business.
Even after rallying 35% over the past four trading days, shares of Green Mountain are fetching a mere 10 times the projected profitability of its new fiscal year that begins next month.
The next few quarters will be critical, and the result will decide who gets the last laugh for a stock that has fallen hard over the past year even after its recent bounce.
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The article Greener Pastures for Green Mountain originally appeared on Fool.com.The Motley Fool owns shares of Green Mountain Coffee Roasters and Starbucks.Motley Fool newsletter serviceshave recommended buying shares of Starbucks and Green Mountain Coffee Roasters.Motley Fool newsletter serviceshave recommended creating a lurking gator position in Green Mountain Coffee Roasters.Motley Fool newsletter serviceshave recommended writing covered calls on Starbucks. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.