Out Fox The $treet

While shareholders typically cheer the inclusion of their stock in a major index such as the NASDAQ-100 ( QQQ ) , research and history tells a different story. Not only is inclusion typically based on a few years of excellent results, but also the process of being included in index funds can create a temporary peak in the stock. In the case of Green Mountain Coffee Roasting ( GMCR ), the specialty coffee and single serve beverage innovator had soared over the last year and comes amidst continuing questions regarding accounting procedures. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The dramatic rise and fall of Green Mountain Coffee Roasters (GMCR) has been interesting to watch from a distance. The stock initially soared to nearly $116 last year providing a P/E over 40x the expectations for 2012. Now with the 40% after hours plunge to below $30, the stock only trades at 12x the updated 2012 earnings guidance. After hours, the company reported Q212 results that largely disappointed the market. Though earnings were in-line, sales were dramatically lower than expected and earnings guidance was slightly lowered for the year. These dramatic swings in stock price highlight the emotional and inefficient nature of the markets. Too much focus is placed on the guidance or analyst estimates instead of the actual results. The company reported 37% sales growth in Q2 which is actually very attractive for a 12 multiple. Even the $2.5 earnings estimate for 2012 would still provide over 40% earnings growth for this company. The stock though isn't so forgiving. Read the ful...