Sunday, April 5, 2015

"The endless quest for growth at a reasonable price brings me this week to a quality stock at a decent price. Keurig Green Mountain Inc. (Symbol GMCR)."

Dow Jones Industrial Average 17,690.41 (Down) Week ending 03-27-2015
Dow Jones Industrial Average 17,763.24  (Up) Week ending 04-03-2015

I can always look to the "Beverage" sector if I need to find some growth. I currently own Constellation Brands, (STZ), and have also owned Monster Beverage (MNST), and Boston Beer Company (SAM) and they have  done very well for me. 

So that led me to the single cup coffee, (and tea), company Keurig Green Mountain Inc. (Symbol GMCR, $114.31)  which seems to me to be trading at a slight discount right now and is down from it's high of $156.92.

GMCR has a PEG ratio of 1.71 and a Return on Equity of 17.10. I go into work and use one of these machines everyday and it works well, no wasted coffee.

Keurig Green Mountain had annual revenues in 2014 of $4.71 Billion dollars. The 3 year growth rate in revenues has run 11.43% and this was after one year where they had 50% plus revenue growth, so quite a run.

The company has just signed a partnership deal with privately held Reily Foods down in New Orleans with New England and French Market coffee and Luzianne Ice Tea pods.

A possible catalyst this week for the stock will be when Bed Beth and Beyond announces their earnings report and them discussing a new Keurig single serve Soda machine that they will be selling. (I guess that they are going after the market now held mostly by SodaStream.)

Zack's has a "Hold" rating on the stock and IBD has a earnings rating number of 70. The stock chart has been ugly recently.

Earnings for 2015 are projecting at $4.09 per share and for 2016 they are looking like $4.68.
Long term earnings growth for the company has been 16.25% and the 3 Year earnings growth has been 22.61%. The company operates at Gross Margins of 44.20%.

Financials are good here with the company having a Current Ratio of 2.80 which is excellent.

The company also pays out a dividend yield of 1% to cover your account expenses.

Insider buying is very favorable here and is running around a 5 to 3 ratio of buys to sells by insiders.

The stock has has been drifting down here so as usual I would say to buy 25 shares and see how it goes. If it goes lower add some more.

This is too good a company for this to keep moving down. Growth at a Reasonable price seems to be the key.

I hope you had a great  and wonderful Easter and Passover holiday. 

You can pretty much put anything in a K-Cup!  A simple and great concept. Buy GMCR.


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