Analysts Debate: Is It Time to Dump Green Mountain Coffee Roasters Inc. (GMCR)?

More important, lo and behold I almost fell out of my chair when I noticed that inventory levels fell! Dare I say that management isn’t just aimlessly buying coffee at a willy-nilly rate and assuming it’ll sell? In years past it did sell, but with purchases coming without regard for market conditions, it often constrained margins. I feel confident that Green Mountain’s new CEO, Brian Kelley, who came over from The Coca-Cola Company (NYSE:KO)‘s North American refreshments division and has a better understanding of its core customer, has the company on the right track.

At just nearly 14 times forward earnings Green Mountain isn’t the value it once was; however, with a growth rate perfectly pacing its P/E (for a PEG ratio of 1), I feel it still has room to head higher. Globally, consumers have shown that they’ll pay up for two things at the moment: branded coffee and healthier food options. With Green Mountain wholly focused on coffee while coffee houses like Dunkin’ Brands and Starbucks worry about other aspects of their business, I can only see things getting even better. I vote to keep this pick percolating in the TMFYoungGuns portfolio.

The final call
We agree that Green Mountain Coffee isn’t the screaming buy it once was, but Sean and Alex overrule my vote (Travis here) to cash in the stock now. We’ll keep an eye on growth, margins, and inventory levels to see if financial conditions continue to improve or whether consumers are changing preference. If something changes, we’ll be back to debate again.

The article Analysts Debate: Is It Time to Dump Green Mountain Coffee Roasters? originally appeared on Fool.com and is written by Travis Hoium, Sean Williams, and Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. Fool contributor Sean Williams has no position in any stocks mentioned. Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, Sean at @TMFUltraLong, and Alex at @TMFBiggles. The Motley Fool recommends Coca-Cola, Green Mountain Coffee Roasters, SodaStream, and Starbucks. The Motley Fool owns shares of SodaStream and Starbucks.

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