Tag - GMCR

The best presentation at the seventh annual Value Investing Congress came from David Einhorn of Greenlight Capital. Einhorn started his hedge fund in 1996 with less than $1 million in assets, and has grown his funds to over $8 billion today.

Did you know that Krispy Kreme Doughnuts (NYSE: KKD) just reported its first profitable year since 2004? Do you care? Well, you should.

A number of years ago, the Winston-Salem based doughnut maker went from growth darling to near oblivion. But, after a few major changes the company seems to be moving in the right direction and could once again gain the adoration of investors.

The number one stock of the past decade (+7,895.4%), Green Mountain Coffee Roasters (NasdaqGS: GMCR), continued its upward trajectory today after it announced a deal with Starbucks (NasdaqGS: SBUX).

Most people tend to think that small cap stocks are all growth companies. The prevailing wisdom is that if a company has a market cap below $3 billion then the reason to buy shares is that the company has tons of room to grow. Maybe eventually become a large cap stock, and in the process earn early investors multiples on their initial investment.

It’s incredibly important for investors to have a solid set of tools to help evaluate potential investments. Otherwise we’re just following what other people say without using our own brains - a sure-fire way to lose money. Independent investors need to think for themselves, and act according to their own research. 

Technical analysis methods blended with fundamental research is the best combination of tools. Over the next couple of weeks I'll review a number of technical analysis tools that you can use to help time your buy and sell decisions.

The last company to revolutionize counter-top beverage machines saw its stock skyrocket more than 10,000 percent. While that return didn't materialize overnight (it took a decade) the company, Green Mountain Coffee Roasters (Nasdaq: GMCR), is still going strong.

In the quarter ended June 26, 2010, the company’s sales surged 85 percent year-over-year.

Green Mountain Coffee Roasters has enjoyed rapid growth by using the razor-razorblade business model - a strategy in which one good is sold at a discount while the second dependent good is sold for a tidy profit.

Who doesn't like cash? Be it currency, or even Johnny Cash, either one is music to the ears of most people. And for investors, cash is king. So today let's take a closer look at how public companies report cash flow on their financial statements. Understanding how cash flows through a company can give you an edge when evaluating a potential investment for big profits.

This is another in a series of educational issues of Small Cap Investor Daily that I hope help you find profitable small-cap investments. You can find past issues on the 'Today's Trading' section of the Small Cap Investor Daily website. Do you have an investing related question you'd like answered? Feel free to ask me and I'll include the answer in a future issue. My address is: editorial@smallcapinvestor.com    

Cash Flow Statement: The statement of cash flows tracks the movement of cash in and out of the business through operations, investment (purchases or sales of assets), and financing. Simply put, the cash flow statement measure the ability of a company to generate cash through various activities. Since we know cash is the lifeblood of a company, it is important to examine how a company converts revenues into cash. We then want to see how the company reinvests that cash to grow the business and generate a return for shareholders.

The income statement ties in, or articulates, with the statement of cash flows. You will see net income is the first line item on the cash flow statement. Net income is then adjusted for non-cash income and expenses such as accruals and depreciation.

These adjustments are made because even though something like depreciation decreases net income on the income statement, the company didn't actually pay depreciation costs out of pocket. Recall that depreciation is an accounting method that reduces the value of assets as their useful life decreases. A depreciation expense is typically recognized on the income statement, and lowers net income. So we add things like depreciation expense back in on the cash flow statement to get a sub-total for Total Cash Flow from Operations. This is what the company brought in from normal operating activities.

Investors can use hiring information to help determine if the company is growing in a direction that supports an investment in shares of the company’s stock.

As I wrote yesterday, “…looking into a company’s hiring practices is just one more tool in the toolbox that can be used to assess the attractiveness of a company before investing.  I like it because it gives me a real look into the company, one that many people don’t see unless they are actually applying for a job.”

I like to see companies that are hiring in areas such as manufacturing, research and development, and finance because hiring in these areas shows me that the company plans on growing for the longer-term.  It typically takes longer to get these positions filled, to train the employees, and to integrate them into company specific processes. But the rewards of hiring and training quality people will pay dividends over the long haul.

Other areas, like customer service and shipping and receiving may indicate that the company is increasing the number of employees to handle greater customer traffic and product volume.  This is great, but could point to a seasonal trend – especially during the holiday shopping season.  Of course, a company’s particular business model should dictate where we want to see hiring.  It’s best to see hiring in areas that are core to that organization’s growth strategy...   

You may be familiar with the explorer William Lewis Herndon. In 1851, he departed under orders from the Secretary of the Navy to explore the Valley of the Amazon. The four thousand mile adventure stretched from the Peruvian Andes to the Pacific Ocean on the Brazilian Coast. Lewis' mission? Seek out opportunities for trade and commerce. 

Today we heard online retailer Amazon's (Nasdaq:AMZN) results. The aptly named company crushed analyst EPS estimates which had called for $0.33 per share. Amazon beat by 36%, delivering $0.45 a share on $5.04 billion in revenue. What's more, the company raised Q4 guidance. Shares are surging 25%.

Talk about exploring opportunities for trade and commerce. It would have been nearly impossible for the average citizen in 1841 to invest in the opportunities Herndon found in the South American Jungle. But there are plenty of ways for investors to benefit from the trends in e-commerce. And small-caps are the way to do it.

Small-cap companies are overlooked and underappreciated by many investors because it's not economical for analysts to follow them. Until the companies start to break-out, and then they are all the rage. Find them when they are taking-off, and you can ride them for handsome gains...

Green Mountain Coffee Roasters (Nasdaq: GMCR) was the subject of my recent September 7 Investing in Vermont column in the Burlington Free Press. My article titled Green Mountain Coffee shares due for pullback discusses the major growth achievements of the Vermont-based coffee company (click here to read the column).

My column also discussed some of the recent insider selling of the stock, and dilutive plans for a $320 million equity financing through the sale of up to 4 million new shares of the company’s stock. With management selling their stock and issuing new shares near an all-time high for Green Mountain Coffee shares, I think investors will be best served waiting for a pullback in price before buying the stock.

However, Green Mountain Coffee Roasters is a classic small cap growth stock success story. Every small-cap investor seeks out promising growth-oriented companies that are on the verge of rapid growth. Lets take a closer look at Green Mountain Coffee Roasters...

During the biggest economic downturn and stock market collapse since the Great Depression, Green Mountain Coffee Roasters (Nasdaq: GMCR) has by all accounts been having its best year yet.

Green Mountain is firing on all cylinders, and in the most recent quarter reported a 61 percent increase in revenues and 123 percent increase in profits. So impressive is the growth that "Fortune Magazine" recently named the company 11th on its annual list of the fastest-growing companies.

Investors in the Waterbury-based coffee company have seen the stock jump 136 percent year-to-date, and a stunning 1,224 percent over the past five years, from $4.53 to $60. The rise in the company's stock follows impressive financial performance coupled with new relationships with Mr. Coffee and Walmart, and an acquisition of Tully's Coffee on the West Coast.

The company is an outstanding example of a small-cap stock that was unknown for years, and has recently emerged as a well-known, high-growth success story. Both institutional and individual investors have been buying up shares, as the media spreads the gospel of coffee from the Green Mountain State.

However, the company's past success and the dramatic rise in share price shouldn't be reason to buy shares of Green Mountain today...

News that Chrysler will be filing bankruptcy is causing stocks to seesaw through Thursday afternoon.

At 2:35 pm ET, the Russell 2000 (NYSE:IWM) is up 0.28%, while the Dow is up 0.25% and the S&P 500 is up 0.32%.

Small caps flying high today include Bare Escentuals (Nasdq:BARE), up 42% after its Q1 results topped the Street’s view. Also higher are Orexigen Therapeutics (Nasdaq:OREX), up 44% on heavy volume, and Green Mountain Coffee Roasters (Nasdaq:GMCR), up 37% after the small cap boosted its FY sales and EPS view.

On the downside, Build-A-Bear Workshop, Inc. (NYSE:BBW) is 20% lower today after posting a Q1 loss, and small-cap Oshkosh Corporation (NYSE:OSK) has falledn 19% after projecting a loss for 2009 and suspending its dividend.

******Bank of America (NYSE:BAC) shareholders voted to remove Ken Lewis as chairman of the board. But he remains CEO, at least for a little while. As much as I railed against Lewis, I must acknowledge that he is a something of a victim.

Now, don’t get me wrong. I have no sympathy for the CEOs who over-leveraged and mismanaged their companies during Wall Street’s greed bonanza. And Lewis was right there with the rest of them.

But when it comes to the Merrill Lynch acquisition and the surrounding events, it’s pretty clear that Fed Chief Ben Bernanke and former Treasury Secretary Paulson hung him out to dry. In other words, I believe Lewis’ assertion that Bernanke and Paulson strong-armed him into the Merrill acquisition and encouraged him to keep his mouth shut about Merrill’s $15 billion fourth-quarter loss.

The one question – and this gets right to the heart of the matter – is why did Lewis play ball? He had to know that his shareholders would be irate. And that’s the point – CEOs ultimately work for their shareholders. And bank CEOs for the most. . .

DryShips Inc. (Nasdaq:DRYS), Green Mountain Coffee Roasters Inc. (Nasdaq:GMCR) and USANA Health Sciences Inc. (Nasdaq:USNA) are among the most actively traded companies in Monday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Arthrocare Corp. (Nasdaq:ARTC), Eagle Bulk Shipping Inc. (Nasdaq:EGLE), American Capital Agency Corp. (Nasdaq:AGNC), Fuel Systems Solutions Inc. (Nasdaq:FSYS), Accuray Inc. (Nasdaq:ARAY) and Gencor Industries Inc. (Nasdaq:GENC).

Delta Petroleum Corp. (Nasdaq:DPTR), DryShips Inc. (Nasdaq:DRYS) and United Natural Foods Inc. (Nasdaq:UNFI) are among the most actively traded companies in Monday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Finish Line Inc. (Nasdaq:FINL), True Religion Apparel Inc. (Nasdaq:TRLG), Iconix Brand Group Inc. (Nasdaq:ICON), Green Mountain Coffee Roasters Inc. (Nasdaq:GMCR), Hibbett Sports Inc. (Nasdaq:HIBB) and i2 Technologies Inc. (Nasdaq:ITWO).

Small-cap stocks meandered through the morning moving back and forth on either side of steady ground as investors juggled negative input from economic data against oversold conditions in the shadow of the previous bounce off the lows. Today’s small-cap gainers are Patriot Coal Corp. (Nasdaq:PCX), Protection One Inc. (Nasdaq:PONE) and K-Swiss (Nasdaq:KSWS).

Other Market Watch highlights today included:

• Looking at the charts, small caps were now flirting with a level that would put the Russell on track for the lowest daily close in more than five years.  
• Tech stocks continue to be a drag on things today, with the Nasdaq 100 persistently underperforming the other indices.  
•  the market fully expects the employment picture to get even worse over the next few months.
• The number of people filing continuing unemployment claims rose to 3.9 million, the highest level in 25 years.  

Small Cap Gainers:

• Patriot Coal Corp. rallied 13% after slipping to fresh 52-week lows earlier in the day. See (NYSE:PCX).  
• Protection One Inc. is up 27%, but the move was accomplished on very light volume. See (Nasdaq:PONE).  
• K-Swiss is trading 9% higher after declaring a special dividend of $2-share. See (Nasdaq:KSWS).  
• China Information Security Technology's Q3 profit rises, shares up 6%. See (Nasdaq:CPBY).  
• Green Mountain Coffee Roasters up 11% on doubled Q4 profit. See (Nasdaq:GMCR). 

Small Cap Losers:

• Charleys Inc., the restaurant chain, was down 25% today and retesting the lows set in mid-October. See (Nasdaq:CHUX).  
• WellCare Health Plans Inc. tumbled 44%, gapping lower to 52-week lows. See (NYSE:WCG).  
• SolarFun Power Holdings announces it will release its Q3 results on Dec. 2; shares are down 2.5% in pre-market. See (Nasdaq:SOLF).  
• Sina Q3 profit rises, provides Q4 revenue outlook. Shares are down 5.2% in pre-market on light volume. See (Nasdaq:SINA). 

Shares of Green Mountain Coffee Roasters Inc. (Nasdaq:GMCR) dipped 7.3% this morning following an analyst firm's downgrading of the stock.
 
Stifel Nicolaus this morning downgraded the stock to "sell" from "hold."
 
Waterbury, Vt.-based Green Mountain Coffee is trading at $35.41, down $2.80 from Tuesday's close. Shares have traded as low as $25 and as high as $44.75 during the past 52 weeks.
 
For detailed price information and news stories on Green Mountain Coffee, click GMCR.

Small-cap stocks turned higher shortly after the opening, underpinned by a decline in crude oil prices, which helped offset some overnight concerns about the closure of a large hedge fund. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 3.66, or 0.50%, at 742.16.

The factory orders report came in at 1.3%, which was above the forecast of 1%. The data was for the July time frame, so it’s a little dated. Stocks edged higher after the report, but this particular report tends to have a muted impact on trading direction for stocks or currencies.

Earlier this morning, the weekly MBA Mortgage Applications Index climbed 7.5%, the refinance index was up 2.1% and the purchase index rose 10.5%, which hints at a modest upside pop in mortgage activity as the fixed rate dipped about 0.05% to 6.39%.

In other economic activity news, MasterCard Advisors said that shoppers reduced spending on clothes and shoes over what should have been a big back-to-school season in August, instead spending money on food and gasoline.

Ospraie Management LLC, announced plans to close its biggest hedge fund, with holdings estimated at some $2.8 billion dollars. The fund was thought to have significant exposure to equities with commodity themes and has been losing money at an alarming clip in recent months. Ospraie will still hold other hedge funds with large investments, but the fund in question has ties to Lehman Brothers Holdings Inc. (NYSE:LEH) as the investment bank has an estimated 20% stake in the fund. There are concerns that this news won’t help Lehman’s effort to raise capital or find a buyer and overshadowed news reports overseas that HSBC, another Chinese bank and several hedge funds were interested in taking a stake in the beleaguered . . .

Americans love their coffee — and they love convenience. Those two demands could help Green Mountain Coffee Roasters (Nasdaq:GMCR) turn some well-placed singles into a home run.

Admittedly, investors looking at the stocks of caffeinated beverage companies have had the jitters after Starbucks (Nasdaq:SBUX) suffered bitter aftertaste from an oversaturation of the U.S. market. The company is closing 600 outlets.

Green Mountain Coffee isn’t facing the same troubles. Far from it, the Waterbury, Vt.-based company has continued to report hefty double-digit profit growth, and its fiscal second-quarter results might have jolted investors seeking a safe haven in a squishy stock market to act.

In part it’s because of a line of single-serve coffeemakers that delivers to java junkies what they might judge is a near-perfect cup of coffee.

In 2006, Green Mountain Coffee Roasters celebrated its 25th anniversary by paying $104.3 million for the 65% of Keurig that it didn’t already own. Ten years ago, Green Mountain was an early investor in Keurig (from the Dutch word for “excellence”), and an eight-year courtship turned into a marriage.

Just as the drip coffeemaker replaced the percolator thanks to Joe DiMaggio pitching Mr. Coffee, some industry observers think the single-cup sector is the next big thing. Keurig is the leader in its field, with more than a third of the market share. Slipping a little plastic pod into the patented Keurig brewer delivers a fresh cup of coffee, . . .

Green Mountain Coffee Roasters, Inc. (Nasdaq: GMCR) executives said strong sales of the company’s Keurig coffee machines and a $3 million advertising campaign will spur continued growth.

Green Mountain’s ad campaign will run in 15 markets during the holiday season, President Nick Lazaris said during the call. Lazaris said the company ran test advertisements previously and expects the new campaign to boost sales.

Green Mountain acquired Keurig Inc., a maker of premium coffee machines, during June of 2006. The Waterbury, Vt.-based company expects strong sales of the machines during 2007, Blanford said. Compared with the third quarter of 2006, the company shipped 41% more of Keurig’s K-Cups coffee systems. Also, Green Mountain’s sales team is targeting hotels for retailing in-room coffee machines, he said.

Revenue in the third quarter ended June 30 totaled $82.4 million, short of the $84 million expected by Wall Street but higher than $50.7 million a year earlier. Net income totaled $3.7 million, or $0.15 a share, compared with analysts’ expectations of $0.14 a share, and compared with $2.3 million, or $0.10 per share, in the year-ago period.

For the fourth quarter, the company reiterated in a statement that it expects revenue in the range of $83 million to $90 million, compared with $66.8 million a year earlier. The company expects fourth-quarter earnings in the range of $0.13 to $0.16 per share, compared with $0.19 in the same period of 2006. CFO Fran Rathke said the company’s earnings will be impacted by non-cash stock compensation expenses and amortization expenses, which are estimated to lower earnings by $0.06 per share.

For the full fiscal year ending in September, the company expects earnings in the range of $0.51 to $0.54 per share, compared with earnings of $0.36 per share in 2006 and analysts’ expectations of $0.53 per share.

The Russell 2000 and the Dow have cautiously moved into positive territory following news of better-than-expected U.S. job growth in June. At 11:38 a.m. ET the Russell 2000 was up 2.32 points, or 0.27%, to 852.45. The Dow Jones Industrial Average had added 49.26 points, or 0.36%, to 13,615.10.

Redwood City, Calif.-based Tumbleweed Communications Corp. (Nasdaq: TMWD), a provider of messaging security solutions, anticipates a net loss of between $0.02 per share and $0.03 per share for the three-month period ended June 30. That’s below analysts’ projected profit of $0.01 per share. “Although our second quarter bookings were within the range we expected when we issued our guidance in April, revenue fell short of our expectations,” CEO James P. Scullion said in a press release after Thursday’s close. The stock is down $0.10, or 4%, to $2.50.