A Low Risk Trade In Green Mountain Coffee Shares
By Rash Menaria: I wrote an article after Green Mountain Coffee Roasters' (GMCR) last quarter earnings recommending buying the stock after its steep correction. My main arguments were the low valuations of GMCR and the continued strength in demand at consumer level for the company’s product. The stock closed at $40 on the first day after reporting. It has recovered ~25% since and is now trading around $50 despite of the steep market correction since then. If we look at current valuation of GMCR, it is trading at 17.9x CY 2012e EPS. This is in line with the average forward PE multiple of its peer group despite of significantly higher growth rate.
Trailing PE Current Year PE Forward PE
JVA 19.11 13.56 9.56
PEET 41.28 36.60 30.84
SBUX 26.87 22.32 18.48
SJM 15.18 14.52 13.16
DNKN 45.20 27.38 20.88
KFT 16.99 15.12 13.57
Average 27.44 21.58 17.75
I believe GMCR’s share will findComplete Story »
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