Keurig Green Mountain
Vermont-based Keurig Green Mountain (GMCR) is another name that's posted huge momentum performance in 2014 -- the coffee company has rallied more than 50% this year alone. And while that momentum put a big target on GMCR's back a couple of months ago, as former momentum winner began to roll over, shares have been recovering hard in May.
GMCR's Keurig brand of coffee brewers and single-serve K-Cup pods have been a phenomenon -- and they're not showing any signs of slowing. With the biggest installed base in the single-serve space, Keurig has some huge advantages over its rivals right now, especially as the firm gets ready to launch its second-generation pod offerings. GMCR operates under the razor/blade model: by giving customers a deal on its brewing machines, Keurig stands to make substantial profits by selling coffee pods on an ongoing basis. Despite the competition in this space, other brands have failed to replicate Keurig's scale...
Make no mistake, Keurig isn't cheap right now. But that hefty price tag comes from a big growth assumption and the potential for transformative new products like the Keurig Cold, which got a big nod from beverage behemoth Coca-Cola (KO) with a huge stake in GMCR earlier this year. The volatility isn't likely over in this name yet, but then again, the gains aren't either.
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-- Written by Jonas Elmerraji in Baltimore.