Keurig signs a new deal with Coca-Cola

The single-cup coffee company saw its shares rise on the deal. Is it a buy?

By Motley Fool Investor Beat May 13, 2014 4:25PM
Keurig Green Mountain (GMCR) saw its shares jump big Tuesday after Coca-Cola (KO)announced it would increase its stake in the at-home coffee brewer.

Back in February, the beverage giant had agreed to a deal that gave it a 10 percent stake in Keurig, with the opportunity to increase that amount to 16 percent. Tuesday, Coke announced that it would take that deal.

In today's "Stock of the Day," Motley Fool analyst Jason Moser says this is a great announcement for Keurig since it's coming at a pivotal time for the company. Caption: A K-Cup by Green Mountain Coffee Roasters
Credit: © Toby Talbot/AP

Once upon a time Keurig was just a coffee machine, but it's created a lot of new relationships recently with companies like Coke and Campbell Soup that have validated its business. On top of that, Coke's stake in Keurig indicates that it has a lot of faith in the future of the at-home beverage market, a niche market that Keurig is poised to take a large chunk of.

So, should investors consider buying today after Keurig's jump? Jason doesn't like the idea of buying after a 10% pop, but he does love the company's many deals and its razor & blade business model. At the end of the day he thinks it's an impressive company with a lot of potential and it should stay at the top of an investor's watchlist.

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1Comment
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Why do they choose Newark NJ? It like south side of Chicago. It will never work on any funding or condition.
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