GMCR giving me the jitters

Quote from NoDoji:

OK, I just noticed GMCR hitting the hi ticker above $98/share. WTF, mate? P/E of 75?? Does their coffee cure cancer?

:D
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But their earnings for 2011 are estimated at $2.85. If that turns out correct then a price at 98 will be a PE in the 30s. And by 2012 it would be down to 25 P/E. If it's still growing 40% by 2012 then it will be selling a lot higher than 25 P/E.

So basically a 75 times PE is justified *if* it has huge growth. Of course if the growth flops, it will crash. But some of the top growth stocks of the past have had high PEs like this and then went on to make them look cheap with hindsight. Microsoft, Dell, Apple etc. And some boomed and then crashed like Iomega, Taser, Crox and so on.
 
Quote from Ghost of Cutten:

But their earnings for 2011 are estimated at $2.85. If that turns out correct then a price at 98 will be a PE in the 30s. And by 2012 it would be down to 25 P/E. If it's still growing 40% by 2012 then it will be selling a lot higher than 25 P/E.

So basically a 75 times PE is justified *if* it has huge growth. Of course if the growth flops, it will crash. But some of the top growth stocks of the past have had high PEs like this and then went on to make them look cheap with hindsight. Microsoft, Dell, Apple etc. And some boomed and then crashed like Iomega, Taser, Crox and so on.
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Gotcha. Etrade only shows earnings estimates for 2010 and says the P/E is 75.

I don't think GMCR will be another CROX, but I do think a large correction lies ahead once the competitors remove market share. BBBY had a Cuisinart promotional video playing in the single-cup coffee section.

Look what happened to darling STEC when a hint of competition reared its head, and then further damage when demand faltered.
 
Quote from NoDoji:

Gotcha. Etrade only shows earnings estimates for 2010 and says the P/E is 75.

I don't think GMCR will be another CROX, but I do think a large correction lies ahead once the competitors remove market share. BBBY had a Cuisinart promotional video playing in the single-cup coffee section.

Look what happened to darling STEC when a hint of competition reared its head, and then further damage when demand faltered.
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Lol anyone ever heard of Tassimo, can't veen find teh discs in the stores anymore. FAD.
 
The problem with STEC wasn't so much competition as it was Cisco being it's primary source of revenue. That was the big problem. Cisco came out and said they had tons of STEC inventory on the books and they weren't getting drawn down. STEC plunged in the wake. That's what happens when your source of revenue is just one big major customer. It happened to ASTG a year ago too.

Anyways, I like SSD drives for the long haul. They'll make their way into consumer products, but there is also alot of competition there. Intel has SSD drives that are really competitive. I don't see any company completely dominating that market. For the enterprise, however, I think STEC has good marketshare. They have interesting RAID systems that boost RDBMS performance incredibly. I would take some positions in STEC at 10.

GMCR. I haven't followed it in awhile. I sold that one after it ran 40%. Anyone have any scoops on it? Why the big drop? I'm guessing it's because of the downgrade?
 
Quote from mililani:

GMCR. I haven't followed it in awhile. I sold that one after it ran 40%. Anyone have any scoops on it? Why the big drop? I'm guessing it's because of the downgrade?
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As with all high flyers trading at ridiculous P/E, Price/Book and Price/Cash Flow levels levels, the earnings call had better mention huge upside growth going forward or the drop will be nasty.

"67% on-year growth in K-Cup shipments fell short of analyst forecasts and represented a decline in sequential shipment growth."

Uh oh, that's not what you want to hear when paying a premium for significant forward growth.
 
No doubt. I never buy anything ahead of earnings. Never EVER. As an example, I was looking at CDCS test its trend line. It was in its channel. But, ahead of earnings? Should I buy? No. I'll just wait. Earnings came out and they barely missed the estimates. Stock tanked over 10%.

Anyways, looks like the run for GMCR maybe over.
 
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