Does Green Mountain Show Greener Pastures Ahead? 2.6.2013

The earnings whisper is currently listed at $0.71 with the street consensus only at $0.65, so many people are not convinced and hopping on the GMCR bandwagon. Think about this fact however, the only major threat to the GMCR produced Keurig coffee maker is the Strabucks Verismo, which has had soft sales at best. Since the debut of the Starbucks machine only 150,000 units have been sold, compared to that of 2.15 million average quarterly units sold of the Keurig. Currently 25 percent of the companies stock has been sold short, but with good earnings a short squeeze could be in effect as bears try and cover their positions before getting hung out to dry.

The stock has also rallied six of the last eight times from earnings and more importantly, three out of four in 2012. The one trend that I have noticed on earnings, is that it either rallies hard to the upside or sells off hard and with that in mind, I can execute a trade that I believe will be profitable. I believe the stock is weighted more to the bullish side, however I always want to define and have proper risk versus reward.