Is Green Mountain Coffee Roasters a Buy Now?

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With shares of Green Mountain Coffee Roasters (NASDAQ:GMCR) trading around $105, 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, and 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.

Do you want to know the secret to Green Mountain’s K-Cup business? It realizes gains whether or not its respective pods are the ones enjoying newly found popularity. When the Keurig coffee machines first hit the market, Green Mountain K-Cup pods were the ones most frequently getting their brew on, no questions asked. These days, the pods don’t enjoy as much of a monopoly over the market, but Green Mountain still isn’t complaining. Why? Many of the most popular brands are actually owned or sold by Green Mountain, so the Waterbury, Vermont-based company is still reaping the benefits when their partners’ respective K-Cups get sold in high frequencies. Bloomberg highlighted that reality in its report Friday and explained that Green Mountain owns or sells a number of the most popular K-Cup brands — from Donut House to Revv — and therefore, it still enjoys a trust over many K-Cup sales.

Even those partner brands that Green Mountain doesn’t own, such as Newman’s Own, helps boost the company’s business because Bloomberg reports that Green Mountain pays royalties to a brand to produce and sell pods with a different label, or as is the case with Starbucks (NASDAQ:SBUX), Green Mountain supplies K-Cups to the coffee chain, and Starbucks handles the retailing. Pretty nifty deal, right? No wonder spokesperson Katie Gilroy says, via Bloomberg, “We’re indifferent as to whether we’re selling our own brand or a licensed pack.”

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