Can Anyone Explain Deidrich Coffee?
Had you invested $10,000 in Diedrich's Coffee two months ago, you'd be sitting on $640,000 or so.
Diedrich's closed at $0.38 on March 25th, and then promptly took off. And it hasn't stopped.
Well for starters, this company was tremendously undervalued as a penny stock. It hit a low of $0.21, making its P/B at the time a paltry 0.11.
But I'm not buying it at today's $23.49 closing price. I think it is far too risky.
They had one good quarter in the last 5 years. It happened to come in the middle of a Recession/Depression, so that get an A+ for that.
But could you have really seen that coming? Nah. I have a feeling that a return to mediocrity or worse could send this bad boy down 70% or more in just a few days.
Still a nice story for the shareholders though. I wouldn't mind paying cash for my next house thanks to a lucky penny stock :)
(And besides, there is so much bad news around here, it's nice to hear that some people are making a killing.)
All Star CAPS members are currently giving DDRX 33 Red thumbs to just 1 Green thumb. That should be enough for any Fool to think twice before plunging in. A look at the balance sheet should seal the deal.
UltraLong has an excellent writeup on DDRX that pretty much sums it up:
Let's recap what Diedrich Coffee does here... they roast coffee beans and are a wholesaler for rare coffees. They are also one of the only four licensees to Keurig's K-Cups. Now I'm not saying with the K-Cup craze right now that their holding this honor of being 1 in 4 is a bad thing and worth zero, but this is absolutely ludicrous.
What I think we need to do here is look at Diedrich's past to tell us all we ever wanted to know about the company. Let's look at their operating profits/losses from continued operations so we can get all those one-time gains and other BS out of the way.
2002: 5 cent per share profit
2008: Bigger Loss
Disclosure: Unfortunately, David in Qatar does not own any shares of DDRX to dump on the unsuspecting public. Nor does he have a new house paid in cash :)
David in Qatar