$35.31
0.08 (+0.23%)
Diedrich Coffee, Inc. (DDRX)
CAPS Rating:
The Company is a coffee roaster, wholesaler, franchiser and retailer whose brands include Diedrich Coffee, Gloria Jean's, and Coffee People.
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Let's stop taking history lessons and be more forward thinking. All of the evidence being given is backward looking. Stocks are discounting mechanism's - always forward looking. The run-up in DDRX is based on a fundamental change in the Company's business and in consumer behavior for that matter. They sold the $$ losing franchises and are now a pure play k-cup wholesale company. If you look at Wall Street analysts GMCR models and assume DDRX keeps roughly 11% share of the sales in the K-cup market, it is conceivable that this company could earn north of $3.00 per share in 2012. It appears that they are growing share given DONUT SHOP coffee is the number one selling grocery item on AMZN and number one k-cup on Keirig.com - and doing very well in BBBY.
In fact, I would be surprised if they earn less than 1.00 in EPS in FY 2010 (June fiscal Year). If that is true, you are paying 20x 1 year forward EPS for a company that is growing Revs and EPS 100%. The stock has made a monster move, I am long the stock and am staying long the stock. I have done several store checks, and it is a very simple and easy story to track now....all about razors and razor blades. Sure the stock could pullback and take a breather, but its the shorts that aren't doing the work, that have created the explosive upside. If they keep trying to short this stock, we could see $40.00 by year end. My long thesis is based on EPS of 1.00 in FY2010 ; EPS of 2.00 in FY2011 and close to 3.00 two years out. This time next year - we would be trading at 10x forward eps if I am correct.
Good luck to all - but do the work, before you get run-over like the other shorts out there.
You may not like the prospect of basing my ideas on the past performance of the company, but really, once a loser, always a loser. Your premise is based on the assumption of just three months. You simply cant evaluate a new business based on three months. This rally is ready to fizzle and I hope for your sake its only CAPS points at stake.
UltraLong
Funny, one could make the same argument about you being the top fool
Two good TOP PITCHES; by ULTRALONG and STOCKJOCKEY.
Right now Stockjockey is ahead on points in DDRX. But Monday, after the bell, will be the first big test of past vs. future performance for the company.
Good luck and may the best pitch win.
Stockjockey101 has, in my opinion, the better argument at this point in time. Consider the possibility that this might be the case of the butterfly emerging from the cocoon. Yes, it has been a grub worm all of its life up until now, but there has been a metamorphosis - a change.
Diedrich was a coffee outlet business. It sold off that old model. All of the old financials are based upon the old model. The grub worm went into its cocoon, and has emerged as a K-cup coffee supplier. The grub worm has grown wings and changed into something else. Maybe it is now a butterfly that will go on to find a beautiful valley. Maybe it is now a stupid moth that will fly straight into the flame of a candle. But it isn't a grub worm anymore. So it makes sense to throw out the old financials (old model) and to pay attention to the recent financials (new model) from here on out.
Now there is a separate analysis to be made ... as to whether Diedrich will continue to succeed and beat out its competitors in retaining and expanding Green Mountain's business, but that is a completely different story altogether. The barriers to entry into this business are not too high, but Diedrich's maintaining its business relationship with Green Mountain is critical.