Green Moutain Coffee and Peet's Coffee to Open Near 52-Week Highs

Green Mountain Coffee Roasters (NASDAQ: GMCR) and Peet's Coffee and Tea (NASDAQ: PEET) both reached new multiyear highs of $111.42 and $63.48 per share, respectively, in Wednesday's trading session.

Green Mountain posted better-than-expected earnings recently, driven by strong results from the company's Kuerig brewing system. The company has seen double-digit growth in net sales for 27 consecutive quarters. The Vermont-based company offers about 200 varieties of coffee, cocoa, and tea to wholesale customers such as supermarkets, resorts, and office-delivery services. Green Mountain has a market cap of $15.8 billion.

Its long-term earnings per share growth forecast is 37.5%, but it also has hefty P/E and PEG ratios. And short interest is about 15% of the float. Shares are trading more than 230% higher than at the beginning of the year. In that time, the stock has outperformed its industry average, as well as such competitors as Starbucks (NASDAQ: SBUX).

Peet's reported better-than-expected second-quarter earnings yesterday, driven in part by momentum in its grocery business. It also introduced a new medium-roast coffee line and offered optimistic earnings guidance for the full year. The company has an $811.4 million market cap and it owns and operates about 190 coffee shops primarily in California. The company also sells coffee through retail grocery chains, to foodservice operators, and via the Internet.

Peet's has a long-term EPS growth forecast of 17.5% and a P/E ratio that is lower than the industry average. Annual earnings have grown in each of the past five years. Year to date, shares are trading more than 50% higher. In that time, the stock also has outperformed Starbucks and the industry average, as well as the broader markets.

Action Items:

Bullish: Traders interested in coffee-related exchange traded funds might want to consider the following trades:

• iPath Dow Jones-UBS Coffee Subindex Total Return ETN (NYSE: JO): up more than 35% in the past year
• PowerShares DB Agriculture Fund (NYSE: DBA): up nearly 24% in the past year
• PowerShares Dynamic Food & Beverage Portfolio (NYSE: PBJ): up more than 23% in the past year

Bearish: Traders might prefer to consider these alternative positions:

• Coffee Holdings (NASDAQ: JVA): up about 360% in the past year
• Starbucks (NASDAQ: SBUX): up about 56% in the past year
• Caribou Coffee (NASDAQ: CBOU): up more than 48% in the past year

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