Friday, March 11, 2011

Coffee give me the jitters

Over years coffee has become a world wide beverage.  Coffee is now grown all over the globe.  Insides say that Japan alone buys more Jamaican Blue Mountain coffee than is even grown in Jamaica each year.  How do you know what you're getting?

A few years ago it was predicted that cheap coffee from Vietnam would dilute prices and hold down cost but look at where coffee prices have gone in the last 10 years.


Let's look at some of the biggest coffee sellers in the US.  This is not an exhaustive list but just a sample.

Starbucks (SBUX) has over 11 billion dollars is sales world wide with 6,706 company owned store in the US, 2,164 over seas and 8,139 licensed locations.





 
Starbucks Corporation (SBUX) purchases and roasts whole bean coffees. It operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. The company offers approximately 30 blends and single-origin premium arabica coffees. It also provides handcrafted beverages, such as fresh-brewed coffee, hot and iced espresso beverages, coffee and non-coffee blended beverages, Vivanno smoothies, and Tazo teas; and merchandise products, including home espresso machines, coffee brewers and grinders, coffee mugs and accessories, packaged goods, music, books, and gift items. In addition, it offers fresh food items, which comprise baked pastries, sandwiches, salads, oatmeal, yogurt parfaits, and fruit cups. Further, it also provides VIA ready brew coffee, bottled frappuccino beverages, discoveries chilled cup coffee, doubleshot espresso drinks, iced coffee, whole bean coffee, and ice creams. The company’s brand portfolio includes Tazo tea, Ethos water, Seattle’s Best Coffee, and Torrefazione Italia Coffee. Starbucks Corporation sells its products in approximately 50 countries worldwide. Starbucks Corporation was founded in 1971 and is based in Seattle, Washington. ( Yahoo Finance profile)

Technical Factors:

  • 100% Barchart technical buy signal
  • Trend Spotter (tm) buy signal
  • Trading above its 20, 50 and 100 day moving averages
  • 5 new highs and up 14.51% in the last month
  • Relative Strength Index 78.90% and rising
  • Trades around 37.97 with a 50 day moving average of 32.86
Fundamental Factors:
  • This stock is a Wall Street brokerage darling with 7 strong buy, 6 buy and 10 hold reports released
  • Sales are expected to increase by 61.00% this year and 7.40% next year
  • Earnings are estimated to increase by 16.40% this year, 18.80% next year and 16.86% annually for the next 5 years
Investor Sentiment:
  • On Motley Fool this is one of the highest followed stocks with 9202 opinions expressed
  • The Caps members vote 5,648 to 1,646 that the stock will beat the market
  • The more experienced All Stars vote 1,695 to 213 for the same result
  • Fool notes that all 19 articles by Wall Street columnists they follow are all positive
Caribou Coffee Company (CBOU) has 413 locations and 13 franchised store and scores 305 Million in revenue.  It is my favorite place to have a cup.  They have couches and fireplaces and a more laid back feeling.


Caribou Coffee Company, Inc. (CBOU) operates coffeehouses primarily in the United States. It offers premium coffee and espresso-based beverages, as well as specialty teas, baked goods, whole bean coffee, branded merchandise, and related products. As of January 3, 2010, the company had 534 coffeehouses, including 121 franchised coffeehouses located in Minnesota; Illinois; Ohio; Michigan; North Carolina; Georgia; Wisconsin; Virginia; Colorado; Maryland; Iowa; Washington, D.C.; North Dakota; Nebraska; Pennsylvania; Kansas; South Dakota; Missouri; Indiana; and Nevada, as well as in the international markets. It also sells premium whole bean and ground coffee to grocery stores, mass merchandisers, office coffee providers, airlines, hotels, sports and entertainment venues, college campuses, and online customers. The company was founded in 1992 and is headquartered in Minneapolis, Minnesota. ( Yahoo Finance profile)

Technical Factors:

  • 96% Barchart technical sell signal
  • Trend Spotter (tm) sell signal
  • Trading below its 20, 50 and 100 day moving averages
  • 23.06% off its high
  • Relative Strength Index 39.81% and falling
  • Trades around 9.11 with a 50 day moving average of 9.79
Fundamental Factors:
  • Wall Street brokerages published 4 strong buy and 2 hold recommendations
  • Sales are projected to increase by 7.80% this year and 9.70% next year
  • Earnings are forecasted to decrease by 19.60% this year but increase by 27.00% next year and 21.00% annually for the next 5 years
Investor Sentiment:
  • CAPS members on Motley Fool vote 110 to 68 that the stock will beat the market
  • The All Stars vote 32 to 20 and are not as positive
  • One of the Wall Street firms Fool follows is Baird and they put out a new buy signal on 2/24/2011
Peet's Coffee and Tea (PEET) has 192 stores plus 8,500 locations that sell their products for an annual revenue of 25+ million


Peet's Coffee & Tea, Inc., (PEET) together with its subsidiaries, operates as a coffee roaster and marketer of roasted whole bean coffee and tea in the United States. The company also offers whole leaf and bagged tea; and specialty food items, such as jellies, jams, candies, beverages, pastries, and other related items. In addition, it markets a range of merchandise, including brewing equipment for coffee and tea; paper filters and brewing accessories; and branded and nonbranded cups, saucers, travel mugs, and serveware. The company sells its products through multiple distribution channels comprising its own retail stores; and a network of grocery stores, home delivery, office, and restaurant and foodservice accounts. As of January 3, 2010, it operated 192 retail stores in California, Colorado, Illinois, Oregon, Massachusetts, and Washington. Peet's Coffee & Tea, Inc. was founded in 1966 and is headquartered in Emeryville, California. ( Yahoo Finance profile)

Technical Factors:

  • 8% Barchart technical Buy signal
  • Trend Spotter (tm) hold signal
  • 3 new highs and up 49.20% this last month
  • Relative Strength Index 46.08% and dropping
  • Trades around 42.53 with a 50 day moving average of 41.28
Fundamental Factors:
  • Wall Street brokerages have published 3 strong buy and 6 hold reports
  • Sales are projected to increase by 9.00% this year and 7.60% next year
  • Earnings are estimated to increase by 18.00% this year, 19.10% next year nd 17.50% annually for the next 5 years
Investor Sentiment:
  • Motley Fool CAPS members vote 189 to 87 that the stock will beat the market
  • All Stars are more split 62 to 41
Green Mountain Coffee Roasters (GMCR) is more of a pure coffee play with about 2 billion is sales.


Green Mountain Coffee Roasters, Inc. (GMCR) operates in the specialty coffee industry in the United States and internationally. It sells approximately 200 whole bean and ground coffee selections, cocoa, teas, and coffees. The company offers Arabica bean coffee, including single-origin, Fair Trade Certified, organic, flavored, limited edition, and proprietary blends under the Green Mountain Coffee, Tully’s Coffee, and Newman’s Own Organics brand names. It also manufactures gourmet single-cup brewing systems and markets its patented single-cup coffee and tea brewing systems for offices and homes under the Keurig brand name. The company provides cocoa, teas, and coffees in K-Cup portion packs, Keurig single-cup brewers, and other accessories. It sells whole bean and ground coffee, K-Cups, Keurig single-cup brewers, and other accessories in domestic wholesale and retail channels, and directly to consumers. The company markets coffee, tea, cocoa, and single-cup brewers to retailers, such as department stores and club stores; and single-cup brewers to distributors, as well as to supermarkets. Green Mountain Coffee Roasters, Inc. was founded in 1981 and is headquartered in Waterbury, Vermont.( Yahoo Finance profile)

Technical Factors:

  • 100% Barchart technical buy signal
  • Trend Spotter (tm) buy signal
  • Recent price jump trades above its 20, 50 and 100 day moving averages
  • 3 new highs and up 49.20% in the last month
  • Relative Strength Index is 84.02% and rising
  • Trades around 61.71 with a 50 dy moving average of 38.89
Fundamental Factors:
  • Wall Street brokerages have 8 buy and 2 hold reports out
  • Sales expected to increase by 81.00% this year and 35.00% next year
  • Earnings estimated to increase by 75.70% this year, 40.70% next year and 30.18% annually for the next 5 years
Investor Sentiment:
  • CAPS members on Motley Fool vote 711 to 402 that the stock will beat the market
  • All Stars vote 261 to 134
The next company is really an unfair comparison but they sell more coffee that anyone and any discussion of coffee sales world wide would just have to include McDonald's (MCD) with over 25 Billion in sales world wide. 32,737 locations can't be ignored.


McDonald’s Corporation, (MCD) together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald’s restaurants that offer various food items, soft drinks, coffee, and other beverages. As of December 31, 2009, the company operated 32,478 restaurants in 117 countries, of which 26,216 were operated by franchisees; and 6,262 were operated by the company. McDonald’s Corporation was founded in 1948 and is based in Oak Brook, Illinois.(Yahoo Finance profile)

Technical Factors:

  • 64% Barchart technical buy signal
  • Trend Spotter (tm) buy signal
  • 8 new highs and up 2.04% in the last month
  • Relative Strength Index 61.00% and rising
  • Trades around 76.68 with a 50 day moving average of 74.61
Fundamental Factors:
  • Wall Street brokerages have 8 strong buy, 8 buy and 10 hold recommendations published
  • Sales are expected to increase by 5.50% this year and 5.30% next year
  • Earnings are projected to increase by 9.50% this year, 9.10% next year and annually by 10.25% for the next 5 years
Investor Sentiment:
  • What can I say?  Almost as many people have an opinion as eat there.
  • Motley Fool CAPS members vote 4,904 to 277 that the stock will beat the market
  • All Stars are very positive 1,234 to 54
  • Of the Wall Street Columnists Fool follows all 25 are positive on this one.
Well there are a lot of ways to invest in this coffee phenomena.  Coffee itself, coffee roasters and distributors, coffee retailers and restaurants that just sell more coffee than can be imagined.

On thing is for certain:  coffee sales will be larger next year than they are this year and sales will get bigger annually for at least 5 years out.

Who will profit by that?  Hopefully you and me.

Jim Van Meerten is an analyst for  Marketocracy Capital Management.  He shares his knowledge and experience from over 40 years of investing in stocks, mutual funds and ETFs on Barchart.com  in his daily blog -- Barchart Portfolio Blogs.














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