Green Mountain Coffee Roasters (GMCR) issued some decaf guidance. But that didn't matter to investors. Shares popped nearly 30% Thursday morning even though the company provided a near-term earnings outlook Wednesday that was less than stellar. It appears investors are excited to hear that the company is boosting its inventory ahead of what it hopes will be strong demand next year.
That's dangerous. Many companies have been burned by boosting inventory in anticipation of demand that doesn't materialize. The big move up in Green Mountain looks a lot like a classic short squeeze to me. It appears that a similar squeeze is taking place with First Solar (FSLR) Thursdeay morning. But short covering may only provide a temporary jolt to the stock. Keep in mind that David Einhorn and many other shorts have been targeting Green Mountain with good reason.
Investors should probably wake up and smell the coffee. Starbucks (SBUX) remains as much a fierce competitor to Green Mountain as much as it is a K-Cup partner. What's more, recent earnings from Stabucks and Dunkin' Brands (DNKN) were about as appetizing as a stale cup of Sanka. For more on Green Mountain, check out today's Buzz video below.
Starbucks is cooling off ... for now.
The Seattle-based coffee chain trimmed its earnings forecast by about 2 cents a share Tuesday, but there's no need to panic. It's not like Starbucks is going to report a loss.
Last year's high coffee prices, Europe's nagging debt problems and the company's baking plans will cut into Starbucks' bottom line this year, said chief financial officer Troy Alstead, at the annual stock conference of MORECatherine Tymkiw - Jun 12, 2012 3:39 PM ET
Starbucks is getting into the bread business.
The Seattle-based coffee chain announced plans Monday to buy San Francisco-based Bay Bread and its La Boulange bakery brand for $100 million.
"This is an investment in our core business," said Howard Schultz, Starbucks chief executive, in a conference call with financial analysts. "After more than 40 years, we will be able to say that we are bakers too."
Schultz said one-third of Starbucks transactions include MOREBen Rooney - Jun 4, 2012 5:21 PM ET
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