Not getting stuck in the dregs.
As shares rallied again on Wednesday, Canaccord Genuity Consumer Products Analyst Scott Van Winkle provided an update on Green Mountain Coffee Roasters. Van Winkle believes the driver of the shares on Tuesday was a combination of strong October brewer sell-through data, talk of supportive commentary by Starbuck’s (SBUX) management on Green Mountain and increased management access as he hosted the company in Boston for meetings with investors. He was told multiple times Tuesday afternoon that the October monthly NPD data showed growth in the high 70% range.
If accurate, this implies a further acceleration from 73% in the month of September, which itself was a significant acceleration. Further, several investors commented to him that Starbucks management made “very supportive” comments during the Morgan Stanley conference Tuesday about K-cup demand (basically that Starbucks could sell all Green Mountain could make), and about the quality of Green Mountain’s value proposition to Starbucks, with plenty of economics per cup for both parties.
Finally, management visited Boston Tuesday to meet with shareholders and will be visiting other cities over the next week to answer investor questions. The access alone was likely positive for the stock. Van Winkle believes that the commentary around a range of investor questions was positively received and is adding to investor confidence. He remains bullish on the stock, expecting several years of rapid growth, driven by rising penetration of Keurig single-cup coffee makers in coffee-drinking households that should drive higher revenue growth and even higher rates of earnings growth as the margin story unfolds.
Green Mtn. Coffee (GMCR : NASDAQ : US$52.30), Net Change: 4.69, % Change: 9.85%, Volume: 20,870,451
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