That franchise model isn't particularly popular among apparel stocks, but it's proven prescient. By gaining access to high-growth markets without the need for boosting its CapEx growth, GPS can focus on its core business and still collect emerging market sales as a bonus. Gap's mass affluent target demographic is the golden goose for retailers, and Gap has been able to market to the group extremely well over the last few decades. That bodes well for the firm's financials when times are good -- and consumer spending continues to heat up in 2013.
Financially, Gap is in strong shape with more than $1.6 billion in cash to offset a $1.2 billion debt load. For a capital-intense retail name, a balance sheet with a net cash position means that it has more than enough wherewithal to handle any economic hiccups in the road.
Green Mountain Coffee RoastersGap's impressive rally year-to-date doesn't hold a candle to what's been happening in shares of Green Mountain Coffee Roasters ( GMCR). Since the start of the year, GMCR has seen its share price climb approximately 77%. Green Mountain is one of the most heavily traded names on the Nasdaq, getting considerable attention because of the breakneck growth of its wildly successful Keurig coffee maker. The fast growth of Keurig and its single-serve K-Cups have also made GMCR a perennial short target. Clearly, that short thesis isn't working out well for 2013. >>4 M&A Deal Stocks to Watch in June K-Cups offer a sticky revenue stream for Green Mountain. Because they're proprietary, the firm can command premium pricing for them without too much encroachment from generic competition. Lately, GMCR has been introducing more interesting drink choices from its Keurig brewers (like hot cocoa or iced coffee) that should continue to drive sales numbers in 2013. Recent news that favored rival Starbucks ( SBUX) is renewing and expanding its partnership with Green Mountain should be seen as the white flag that it is -- SBUX's rival Verismo brewer isn't destroying Keurig's share of the market. GMCR isn't a bargain name right now -- far from it. But as long as momentum continues to shove shares higher, it makes sense to be an owner. We're riding shares of this Rocket Stock this week.