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 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.
2:28PM EST 56.28 last GMCR +1.19 on the day (high 56.62, low 55.13)
I like to buy good value and GMCR is a lot closer to great value here.
Not a bad exit for a "buy cheap" idea.