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Green Mountain Capitulates, Is It A Buy?



May 03, 2012 – Comments (0) | RELATED TICKERS: GMCR.DL

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is getting smoked today on the back of an earnings miss and uncertain guidance going forward. The stock is trading at $25.97, -23.55 (-47.56%). The biggest volume of the day came around 12pm ET as the stock hit a low of $24.40. This is known as capitulation and usually notes a major low in the stock.

This reaction appears to be overdone if you just look at the earnings and guidance. The stock is currently trading at 10 times next years earnings. However, the uncertain guidance did shake investors nerves a little more. Either way, this stock has probably priced in a majority of the negative future news with a 50% drop. While high risk, it may be at a solid level around $25.00 a share. There is some good technical support at $25.00 as well. The next major support below is at $22.50.

Gareth Soloway

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