Green Mountain Coffee Roasters (GMCR) made a big splash with its Keurig and K-Cup technology. But now GMCR has stiff competition from Starbucks (SBUX) and its Verismo, Nestle (NSRGY) and its Dolce Gusto line of Nescafe products, and gadgets from Tassimo, Cuisinart and a host of others.
GMCR stock has crashed more than 60% from its 2011 peak of about $116 a share. While Starbucks, long the front-runner, might no longer be eager to buy Green Mountain now that it has launched the Verismo, GMCR still could be a buyout play. The K-Cup technology is pretty ubiquitous, and a company like Nestle could benefit big-time from that kind of distribution.
Furthermore, coffee consolidation is very common. Peet’s Coffee just went private for $1 billion, then the same owner snapped up Caribou Coffee soon after.
GMCR certainly is a risky proposition. The stock has lost about 8% in short order since its recent earnings trouble earlier in February. However, some analysts are bullish on the long-term as new strategies come on line.