Brian Kelly is no stranger to competition. He was on the frontline of the Cola Wars as a former senior executive at Coca-Cola Enterprises (CCE), pitted against Pepsi (PEP). Now in his first week as CEO of Green Mountain Coffee (GMCR) he meets a new arch enemy in Starbucks (SBUX). The Seattle coffee giant, which is holding a highly anticipated analyst day in New York today, recently released their Verismo single-cup coffee brewer; brewing up fresh competition for the Keurig coffee maker.
"This was something that Green Mountain would prefer that Starbucks didn't do, but I think it [Verismo] a lot more like the Nespresso machines," says Breakout regular and co-founder of OptionMonster.com, Jon Najarian. "That's what Starbucks is popping out. They're not gonna be pumping out cups of joe similar to what you get from Green Mountain."
So then, can anyone unseat Green Mountain's coffee dominance?
For starters the company posted blockbuster Q3 earnings that saw them beat on both EPS ($0.64 vs. $0.48 est.) and revenue ($947MM vs. $902MM est.). Those numbers came, in part, from 47% quarterly growth in K-Cup sales and 30% growth in Keurig brewers and accessories. On top of that, Najarian voices confidence in the new CEO arguing that he brings credibility to the role and that "he vetted this company and he looked at what some of the SEC investigations were and he's satisfied."
Despite GMCR shares gaining 64% in the last three months, Najarian still sees upside potential if you're willing to wait for a good buying opportunity at about $32 a share.
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"I think this stock [GMCR] is a little overextended now," he says, "then we'll see what kind of sales they had during the holiday season of the Keurigs and so forth that'll make my decision for me."