Keurig Green Mountain shares are hot this year. The stock is up 65 percent, it’s leading the Nasdaq 100 rally and it’s among the top five best performing stocks in the S&P 500.
So, will Keurig Green Mountain shares grind even higher, or is it over-caffeinated?
Going strictly by the charts, things look good, at least in the short term.
“I think short term the stock can make a bit more progress on the upside,” said Mark Newton of Greywolf Execution Partners, who stressed timing is everything when it comes to this trade. “For a short-term trader, I still think the stock could get up to $135 [per share], potentially $140 [per share].”
Newton pointed out a bullish cup and handle formation on the year-to-date chart. “Often times you will see a stock come up, test the highs and then go sideways for a couple of months, which is what we’ve seen,” said Newton who reiterated that this pattern can send shares around 10 percent higher.
But Newton does see some concerns for the stock long term. “Momentum is now starting to wane a bit on weekly charts. It’s had a history of really peaking. If you look back at 2009, 2011, 2013, you’ve had these dramatic spikes and then weaken.”
According to Erin Gibbs of S&P Capital IQ, the fundamentals match up to the technicals, “I think over the next 12 to 18 months, there’s actually a lot of positives going for this company,” she said, noting that she is relatively bullish but would rather buy the stock at around $121 [dollars per share].
And according to Gibbs, the company has three strong factors going for it: brand recognition; two new brewers; and license agreements with Smuckers and Coca-Cola.
“They’re really expanding this at home beverage market,” she said. “I don’t think analyst estimates are really reflecting some the potential we have over the next year to 18 months.”