Green Mountain Coffee Roasters, Inc. (GMCR)

TMFEnochRoot (99.83) Submitted: 8/6/2008 10:03:19 AM : Start Price: $21.84 GMCR Score: +185.56

Growth stocks are hard for me to figure out, but I'm taking a stab with this one. The recent quarter's shortfall in Keurig sales appears more a channel issue than an end-customer issue, and holiday sales that demonstrated continued momentum coupled with the high short interest would be a near-term catalyst for the shares.Longer term, to justify the 41x P/E multiple currently afforded the stock, GMCR needs to achieve greater than 25% EPS growth for at least the next 5 years. While consensus expects 50%+ EPS growth for 2009, the real challenge is getting comfortable that 1) mass adoption of single-serve coffee at home and in the office place will become a reality , and 2) Keurig's market share dominance will expand with the catagory beyond the pockets of adoption in the Northeast and Mid-Atlantic currently. I believe they will, and recognize that there is at least 60% downside here if it in fact doesn't. However, the rewards available to an owner of a concept that does in fact reach mass adoption are substantial, even from a seemingly pricey starting point.I should add that I own both a Tassimo and a Keurig, and use the Keurig 90% of the time. I also hate most GMCR coffee, and yet I stuck around long enough to find 2 or 3 that I do like. The fact that I am a committed user of this product speaks volumes to me.