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Green Mountain Coffee Again

05/10/13 11:20:33 AM
by Koos van der Merwe

The news is that Green Mountain Coffee Roasters (GMCR) has signed a new deal with Starbucks. Is it a buy at this level?

Security:   GMCR
Position:   Hold

On May 8, 2013 Brian P. Kelley, President and CEO of Green Mountain Coffee Roasters (GMCR) said, "Our fiscal second quarter results demonstrate the leverage inherent in our business model. Specifically, strong sales of our single serve packs drove 14% revenue growth and 45% non-GAAP earnings per share growth in the quarter." They also announced that they had signed a new deal with Starbucks.

Figure 1: Daily chart showing buy signal.
Graphic provided by: Omnitrader.
 
The daily Omnitrader chart of GMCR in Figure 1 shows a buy signal on October 18, 2012, when the price was $24.83 and a second buy signal given on April 10, 2013, when the price was $57.11. The advisor rating shown on the chart was 84, a strong rating that strengthened the buy signal. The RSI signal shown on the chart is suggesting uncertainty, but because all four strategies shown in green below the vote line all confirmed the buy signal, the share would have been bought.

Figure 2: Weekly chart showing buy signals.
Graphic provided by: Omnitrader.
 
The weekly Omnitrader chart in Figure 2 of GMCR shows how the vote line gave a buy signal on August 27, 2012 and has remained a buy since then. Looking back over previous buy signals given by the vote line, we see that they have been successful. You would have, however, been stopped out as the price fell below the Verve trailing stop rather than sell on the vote line stop signal. Note that the RSI signal is at overbought levels, but has not given a sell signal.

With GMCR signing a deal with Starbucks, and with strong sales, this is a company to hold in your portfolio.



Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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