Green Mountain Coffee Roasters

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A consumer non-cyclical player whose insiders are snapping up a decent amount of stock in is Green Mountain Coffee Roasters ( GMCR), which is engaged in the specialty coffee and coffee maker businesses. The company operates in two business segments: the specialty coffee business unit and the Keurig business unit. Insiders are taking advantage of this stocks massive dip in the last three months, since shares have dropped over 40%.

Green Mountain Coffee Roasters has a market cap of $7.79 billion and an enterprise value of $8.37 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 38.44 and a forward price-to-earnings of just 13.83. Its estimated growth rate for this year is 57.3%, and for next year it's pegged at 41.1%. This is far from a cash-rich company, since the total cash position on its balance sheet is just $13.2 million and its total debt is high at $592.91 million.

A director just bought 4,000 shares, or $217,808 worth of stock, at $54.45 per share. Two other directors also recently bought around $100,000 worth of stock, at $42.17 to $43.36.

From a technical standpoint, this stock is currently trading substantially below both its 50-day and 200-day moving averages, which is bearish. This stock absolutely crashed from its September high of $115.98 to a recent low of $34.06 a share. Since that crash, the stock has rebounded sharply on heavy volume to its current price which sits at around $50 a share. The stock has also started to form a sideways trading pattern in the last couple of weeks between $48.33 and $55 a share.

If you're bullish on this stock, I would look buy off any weakness as long as that near-term range low of $48.33 is not violated. I would then add to any long position once $55.18 is taken out to the upside with volume. Look for volume on a breakout over $55.18 that's tracking in close to or above its three-month average action of about 7.7 million shares. Keep in mind that if we get high-volume move over $55.18 then look for that gap down from $72.27 to start getting filled.

Green Mountain is a top holding in both Discovery Capital Management's portfolio and Coatue Management's portfolio. I featured it earlier this month in a list of earnings short-squeeze plays.

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