Should this one come back to earth?

Ok, the single analyst covering the stock expected 50 cents for the whole year while they just earned 22 cents in the quarter. But still, quintupling the share price seems a tad overdone for this coffee wholesaler (JVA)…

The graph (below) does look a bit overdone, doesn’t it? Most of the industry has put in a strong performance, but we feel things should at least pause. Wholesale coffee is hardly the exponential business model the stock price graph suggests it is.

Here is what’s going on (note that the article is from June, but the price has kept on rising ever since):

Coffee Holding Surges, Costs Well Managed

BROOKLYN, N.Y. (TheStreet) — Coffee Holding(JVA ) shares continued to skyrocket Friday after the little-known wholesale coffee roaster posted strong quarterly results.

Coffee Holding stock jumped 26.8%, or $3.26 per share, to $15.40 ahead of midday Friday on heavy trading. More than two million shares changed hands less than halfway through the session, compared with their average daily volume of just 367,000.

On Thursday Coffee Holding shares surged 42.8% to close at $12.14, also amid very heavy volume.

Coffee Holding’s stock movement came as a result of its stellar quarterly report, but there was likely a fair amount of short covering going on Thursday as well, Morningstar analyst Lauren DeSanto told TheStreet.

She said the company’s quarterly report was very strong, and attributed top-line growth, in part, to an acquisition made last year — the revenue of which was folded into Coffee Holding’s net sales for the quarter.

DeSanto praised Coffee Holding CEO Andrew Gordon’s ability to successfully manage higher coffee costs while maintaining “really strong operating leverage against that.”

A number of the big coffee players like Starbucks(SBUX ), Green Mountain Coffee Roasters(GMCR) and even J.M. Smucker (SJM) (which operates the Folgers and Dunkin’ Donuts brands of coffee), have each reported that higher coffee costs pressured their results in recent quarters. The entire group passed those costs on to consumers through price increases, and Coffee Holding has done the same.

“Our price increases helped us keep pace with the rising price of green coffee, improving our margins on both our private-label and branded businesses,” Coffee Holding said Thursday.

Coffee futures hit a three-decade high of $3.0615 per pound on May 3 but has come down somewhat from that price in recent trading sessions. The commodity most recently settled at $2.6210 per pound on Friday.

Also impacting Coffee Holding’s strong quarterly results was the recently announced deal between Starbucks and Green Mountain where Starbucks and Tazo tea branded K-Cup portion packs will be made available for Green Mountain’s Keurig’s single-cup brewing system. Coffee Holding drives around 50% of its sales from Green Mountain, DeSanto said.

For the three months ended April 30, Coffee Holding reported net sales of $37.3 million, up 87.4% year-over-year. Net income came to $1.2 million, or 22 cents per share, up 50% from the year-earlier period.

DeSanto, one of the only analysts who cover the stock, had expected Coffee Holding to earn 50 cents for the entire year, clearly an underestimation by her own admission.

The analyst will look to revise that estimate now that Coffee Holding reports its second-quarter results. She likely won’t double her fair value estimates, but will certainly raise them, she said.

DeSanto had valued the stock at $6 per share, but will look to revise that target up as well, she said.

We are now at $26.75 (note the graph self-updates). The RSI stands almost at 90.  While these were fine results but the stockprice has quintupled in less than three months. The analyst had a $6 price target and while it will be increased, she said she wasn’t likely to double it.

So the stock price, at $26.75 seems a bit overdone to us. Writing out of the money calls would be our preferred strategy but they aren’t available, alas. So if you dare outright shorting seems an idea that bubbles up as naturally as it’s share price has. Some shorts might still be covering, as they were obviously caught by surprise, but we can’t see any more substantial gains the way it’s been trading, to be honest.