The Coffee Surge

We’ve had considerable success lately with coffee stocks. One of my favorites has been Green Mountain Coffee Roasters (GMCR). What I love about Green Mountain is that it’s still barely on Wall Street’s radar. Only nine Wall Street firms even bother following it, while Starbucks has 21 analysts tracking it.

Green Mountain offers about 180 varieties of coffee, cocoa and tea. The company sells its java in lots places, from Exxon to McDonald’s and even under Newman’s Own Organics brand, but the biggest money-maker for this firm is its Keurig single-cup brewing systems for office and home use. As the recession puts the squeeze on caffeine junkies, it’s much cheaper to make your own cuppa joe at home or at the office, which means booming sales for Green Mountain.

In April, I told investors to buy shares of Green Mountain before its earnings report. The company delivered a huge earnings surprise and the stock soared 37% the next day. Jim Cramer was nice enough to point out my big call on his Mad Money show.

Unbelievable! Stock had a major ramp, it is clearly a short squeeze. My friend Louie Navellier who writes for Real Money, has his own newsletter, predicted that this stock would have a monster move. He predicted it just seven days ago.

I recommended selling the stock after the big move. We made 80% in a little over two months. The good news is that the stock is back on our Emerging Growth Buy List. We already have a 43% profit in five months. The next earnings report is due on November 11.

My other top coffee play is Diedrich Coffee (DDRX). This stock is up 16% today and it’s a 35% winner in just one month. Diedrich is one of the top performing stocks of this year. The shares are up over 13,000% since their March low. That’s enough to turn $8,000 into $1 million. Not bad for seven months work!

Both Diedrich Coffee and Green Mountain Coffee are outstanding buys.

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