Green Mountain Coffee Roasters
If there's ever been a poster-boy for short squeezes, it's Green Mountain Coffee Roasters (GMCR). Not only is the specialty coffee stock up more than 65% in the last 12 months, the shorts have also jumped back in at every pause along the way. GMCR's current short interest ratio of 14.36 means that it would take short sellers nearly three weeks to cover their bets at current volume levels.
Green Mountain owns Keurig, the brand of beverage brewers that use self-contained K-Cups to make coffee, teas, and other drinks. K-Cups offer a sticky revenue stream for Green Mountain. Because they're proprietary, the firm can command premium pricing for them. And because the firm can offer new, diverse drink choices (such as hot cocoa or iced coffee), it's able to drive sales among its large base.
Shorts argue that Keurig is a fad -- and they may be right. But as an investor, I want to own the fad stocks. They're the ones that get to ring the register the most. Numerous major (non-fad) competitors have tried to unseat Keurig's leading position in the single-brew coffee business. So far, it hasn't worked which is why next week's earnings could be a squeeze catalyst for GMCR.