June 8, 2012

Green Mountain Coffee Roasters Inc. (GMCR)

Green Mountain Coffee was ice cold today, down 4.81% at $23.13. Over the past few years, the company has gone on an acquisition binge, buying Diedrich, Timothy's Coffee, Tully's, and Van Houtte. These companies had substantially more efficient manufacturing operations and much better inventory management. However, Green Mountain was unable to harness these factors, showing that GMCR missed some large opportunities. Another factor leading to Green Mountains down day was news that Starbucks will begin to sell single serve coffee cups for the Keurig (K-Cups). This scared off some investors as Starbucks has the ability to take a portion of the K-Cup market from Green Mountain. Although the K-Cup market is small, it is growing rapidly. Mix the growth potential of the K-Cup market with Starbucks customer loyalty and one can see that this could be a very profitable venture. The poor day for GMCR has left investors with a bad taste in their mouth, like four-day old gas station coffee.

Molina Healthcare Inc. (MOH)

Molina Healthcare skyrocketed today, up 26.39% at $22.46. The company saw its shares pop when it announced that it would continue to be a Medicaid managed health-care provider in Ohio after winning a bid from state officials. Although the company is up a huge amount today, it comes after the stock was crushed yesterday, down around 26%, so the stock breaking even today. However, buyers before the close yesterday saw a huge profit today. Regardless, the news today showed that Molina will receive new business, and that is enough to bring Molina back from the grave. Today, the company had a great bounce and outperformed nearly everything in the market.