timwest
Long

GMCR - Keurig Green Mountain - Deeply Oversold

NASDAQ:GMCR   KEURIG GREEN MTN INC
856 11 16
2 years ago
All of the bad news seems to be out for Keurig (Green Mountain Coffee             Roasters, GMCR             , is the symbol).

1. They created a brewing machine that didn't allow you to use the competitors K-Cups = FAIL.
2. They created a mini-brewing machine that caught fire = FAIL
3. They partnered with Coke ( KO             ) to market a cold-beverage machine = FAIL (my guess).

So, the investors have run for the exits and dumped their shares.

But, remember, KO             has invested a great deal of capital into GMCR             here and might have something up their sleeve. GMCR             was holding strong last week during the market turmoil, which told me that there were no more sellers, or at least the anxious sellers are out of the way.

I bought shares last week at the 50.7 level and sold the Oct-60 call for 90 cents. Yesterday with the market down 500 I decided to exit the position and bank the profit at the 55 level, which is a great return for one week. But now I'm having sellers remorse. Why? The stock is cheap and I sold to get cash to redeploy into something I like better that is cheap. But I can't find anything cheaper at the moment, besides silver             and crude oil             . (Note: I published a chart on SLV             today showing how cheap it is relative to gold             , check it out).

SO, with Earnings Yields in excess of 11%, after tax, this is sweet deal and it gives some support under GMCR             shares. You would think that anyone would like to invest at the 15% return per year level (pre-tax return), but given the last 3 fails by GMCR             , that's why this return is available. You have to step in and buy when things don't look too rosy.

Keep me posted on what you think here and I'll do the same for you.

Tim

2:28PM EST 56.28 last GMCR             +1.19 on the day (high 56.62, low 55.13)
a year ago
Comment: Still cheap and perhaps a little cheaper. Their new soda machine is not something I am excited about, but I think their basic coffee business is a cash cow.

I like to buy good value and GMCR is a lot closer to great value here.
a year ago
Trade closed manually: Takeover by Private Equity Group for $92/share.

Not a bad exit for a "buy cheap" idea.
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G13Man
2 years ago
i was just noting how the stock did not dump with the market and up poped ur take , i agree ,
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timwest PRO
2 years ago
For what it's worth, I advised my daughter to invest $1000 in GMCR when it was under $50/sh. I haven't seen her confirmation, but that is what she said she did. (full disclosure)
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timwest PRO
2 years ago
And if anyone wants to "like" any of my previous BEARISH charts on GMCR, feel free. Hardly anyone has noticed them.
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Ape
2 years ago
Hey nice post, I've been watching this myself. What's your take on the recent slip in revenue this year?
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timwest PRO Ape
2 years ago
I think they oversold Keurig machines and the market is saturated at the moment. I think competitors are eating into their K-Cup business, but my guess is that the price reflects almost zero growth and further erosion of their profit margins, so I like my odds here.
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keshavreddi
2 years ago
Tim, what is Stop loss and target for this trade?
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timwest PRO keshavreddi
2 years ago
Stop loss 10%. UPside 30% over 3-6 months. Long term time frame.
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jangseohee
a year ago
snapshot

snapshot

Yes Tim,

i am willing to invest in this ^_^
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2use jangseohee
a year ago
I am also looking at this company for the last 2 weeks.

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2use
a year ago
Tim, are you buying at these levels or are you waiting for some new based on a projection?
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2use
a year ago
What about todays price action? I see a lot are interested in shorting below 50
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