Wall Street is mad about coffee pods

Wall-Street-is-mad-about-coffee-pods

Say what you like about their quality, taste and environmental inefficiency, but coffee pods are taking America by storm. And Wall Street is not immune to their charms, apparently.

caffeine-high-keurig-green-mountain-s-p-500_chartbuilder

Keurig
Green Mountain is, at the time of writing, the best-performing stock on
the Standard & Poor’s 500 Index in 2014. Its share price has soared
by nearly 78% this year.

The
surge is partly a reflection of ravenous consumer appetite for
pod-derived coffee in general, and Keurig’s machines and pods in
particular. According to Euromonitor, Green Mountain grabbed a 19.4%
share of the US retail coffee market last year, up from basically zero
in 2004.

Lucrative licensing deals are another factor: Last week the company secured an agreement with Kraft Foods, enabling it to exclusively produce pods for brands such as Maxwell House and McCafe.

And
arguably the biggest reason for strength in the stock is Keurig’s
increasingly close relationship Coca-Cola. In February, the iconic
beverage giant took a 10% equity stake in Keurig (which it has since lifted to 16%). The two companies are collaborating on instant carbonated beverages for consumption at home (Coke pods!).

Only a couple of years ago, Green Mountain was being circled by short sellers amid allegations of accounting irregularities.  Its fortunes have evidently improved rather dramatically since then, which must be a smooth taste for its shareholders.

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