1-Star Stocks Poised to Plunge: Green Mountain? - msnbc.com

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, specialty coffee brewer Green Mountain Coffee Roasters has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Green Mountain's business and see what CAPS investors are saying about the stock right now.

Green Mountain facts

Headquarters (Founded)	Waterbury, Vt. (1981)
Market Cap	$15.1 billion
Industry	Packaged foods
Trailing-12-Month Revenue	$2.3 billion
Management	CEO Lawrence Blanford (since 2007) CFO Frances Rathke (since 2003)
Return on Equity (Average, Past 3 Years)	19%
Cash/Debt	$76.2 million / $429.9 million
Competitors	Kraft Foods (NYSE: KFT) Sara Lee (NYSE: SLE) Starbucks (Nasdaq: SBUX)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 38% of the 1,311 members who have rated Green Mountain believe the stock will underperform the S&P 500 going forward. These bears include All-Star zwalt99, who is ranked in the top 5% of our community, and Jeffrey2012.

Earlier this month, zwalt99 touched on Green Mountain's seemingly unsustainable valuation: "No one grows 100% per year forever, and this stock is priced like it will. ... [Free cash flow] is negative, and their main product (expensive coffee maker) is probably a fad."

In fact, Green Mountain currently sports a rather lofty P/E of 95.5. That represents a clear premium to industry peers like Kraft (20), Sara Lee (9), and Starbucks (25).

CAPS member Jeffrey2012 elaborates on the Green Mountain bear case:

I actually like this company since their business is phenomenal. They have prudently used their stock offerings to pay off debt and actually fund real growth.

The real danger is that they have grown way too fast for their own good at this time attracting way too much hot money in a dangerously scary market. With all the chatter about risk off trades and I'm sure plenty of foolish fund managers chasing this stock to the moon, they will most certainly sell to either lock in profits or sell because they missed the boat.

I'm downing this stock due to strictly valuations and not on business issues at all.

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