Green Mountain Coffee Roasters Exit Signal

Last night while checking stockspotter I noticed a Wednesday exit signal for Green Mountain Coffee Roasters (GMCR).  The trade was held for 8 days and earned 1.58%.  I’ve actually done a bit of research on this company in my investment group before the Starbucks deal exploded the stock.  Regrettably, my group was not bold enough to take advantage of what would, ultimately, be a fantastic opportunity for quick profit.

This is an incredibly important company AND SECTOR to follow considering that coffee price increases have outpaced even the hike in gasoline prices the past year. A one-pound can of ground coffee sold for $5.10 in April, up 40 percent from $3.64 the year before, according to the Department of Labor. By comparison, a gallon of regular gasoline cost $3.83 on average on Tuesday, up 37 percent from a year earlier.  And while fuel prices are expected to stabilize, coffee increases could continue for some time because the prices that coffee companies pay for unroasted beans are still climbing — fast.

That said, I’ve stumbled across several traders concerned about the company’s books.  For instance, Sam Antar of seekingalpha recently blogged about his discovery of balance sheet inconsistencies.  To sum, he found a $0.847 million discrepancy in the company’s reserve numbers.  You can read more about his findings here.  This issue combined with the technical exit signal prompt me to hold serious reservations against going long Green Mountain Coffee Roasters.

Additional Company Info: Green Mountain Coffee Roasters, Inc. operates in the specialty coffee industry in the United States and internationally. It sells approximately 200 whole bean and ground coffee selections, cocoa, teas, and coffees. The company markets coffee, tea, cocoa, and single-cup brewers to retailers, such as department stores and club stores; and single-cup brewers to distributors, as well as to supermarkets.

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