For many people, there’s no better way to start the day than with a cup of coffee. In fact, coffee has become such an essential part of so many people’s daily routines that the coffee industry is now worth over $100 billion. In this article, we’ll discuss the best coffee stocks on the market to add to your portfolio.
Coffee stocks make an excellent investment for a number of reasons. Since many people consider coffee to be an essential part of their daily routine, these stocks are somewhat recession-proof.
Before the pandemic, coffee shops were also a popular place to meet friends or colleagues. We can expect to see some growth in this sector as countries around the world get COVID-19 under control, and coffee shops can open back up again.
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Best Coffee Stocks
Starbucks Corp. (NASDAQ: SBUX)
Starbucks Corp. is the largest chain of coffee shops in the world. In fact, there’s a very good chance there’s a Starbucks in your neighborhood. As of 2019, the brand had over 30,000 locations spread across 70 countries.
Jerry Baldwin, Zev Seigl, and Gordon Bowker founded Starbucks in Seattle in 1971. They quickly opened several locations throughout Seattle. By the late 1980s, they launched their first locations outside of Washington, which were in Chicago and Vancouver, BC.
Today, Starbucks has a massive market share. They have a robust rewards program and mobile app, where customers earn points towards free drinks. This has helped keep customers loyal, even with increased competition from independent specialty coffee shops.
Another way that Starbucks has been competing with these independent shops is through their Reserve Roastery locations. These locations offer a high-end experience and products that you wouldn’t see at a traditional Starbucks location. These include seasonal blends of artisanal coffee, a large food menu, cocktails, and other alcoholic beverages.
Despite some initial struggles in March of 2020, Starbucks has rebounded quickly. In fact, Starbucks shares are now trading at their highest point ever. Unlike many full-service restaurants, Starbucks has easily been able to pivot to a takeout and delivery operation.
Starbucks is expected to announce their latest earnings at the end of January 2021. Stock market experts are estimating slight declines in revenue. However, there’s still plenty going for this company that makes them a good investment.
Starbucks has a huge market share, and they will likely continue their international expansion over the next decade or so. They also have a massive market cap and pay consistent dividends of 1.73 percent. This is a great long term stock to have in your portfolio.
Keurig Dr. Pepper (NASDAQ: KDP)
Keurig Dr. Pepper is one of the largest beverage companies in the United States. The company formed when Keurig Green Mountain acquired the Dr. Pepper Snapple Group in 2018.
The Keurig brand has done very well this year as many people have been making their coffee at home. Keurig Dr. Pepper is known for their namesake coffee machines and corresponding coffee packs, as well as ground coffee beans, sodas, juices, and more.
Green Mountain Coffee Roasters started as a specialty coffee roaster in Vermont in the 1980s. The company maintains a portfolio of fair trade and organic products.
Keurig has completely changed the way people make coffee. Instead of going to a coffee shop, they can use Keurig machines to make a single serving of coffee at home. These servings come in different flavors as well to replicate the flavor of your favorite beverages.
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Keurig Dr. Pepper stock has recovered very well from the market crash back in March. In fact, their stock price has been on a slow but steady upward trajectory.
They’ve also caught the eye of experienced investors because of their earnings growth. Current data indicates that their earnings per share have gone up dramatically. With such strong earnings growth, Keurig stock is a great deal right now.
Nestle (OTC: NSRGY)
Nestle is a Swiss company that makes a variety of products in the food and beverage sectors. They’ve become one of the top coffee companies on the market because of their Nespresso and Nescafe coffee brands.
The Nescafe brand has been around for over 80 years. They make ground coffee beans as well as ready to drink products and coffee machines. The Nespresso brand is similar, but focuses on single-serve coffee pods and machines.
Nestle is the largest food company in the world. Outside of coffee, they produce candy, cereals, tea, frozen food, yogurt, seasoning, pet products, and more. You can find their products in stores all over the world.
They are also part of the Global Coffee Alliance with Starbucks. This means that Nestle can license packaged Starbucks products designed to be used at home. This alliance has been very beneficial for both companies over the last year, as so many people are switching to drinking their coffee at home.
This company has a long history of financial success, and they make an excellent long term investment. Since many of their products are consumer essentials, they are relatively recession proof. Their stock price is currently trading higher than it was at the same time last year.
Nestle currently has a solid market cap of $280 billion. Their price to earnings ratio is also relatively low. This means that their stock is fairly priced given their financial performance in recent months.
Monster Beverage (NASDAQ: MNST)
Monster isn’t your traditional coffee stock, but in recent years, they’ve been offering their own twist on coffee drinks. Their Java Monster drink comes in 10 different flavors. It combines coffee and cream with Monster’s signature energy boosting ingredients to create something that will keep you feeling perky all day long.
The company is based in Corona, California. They began in 1935 as a juice company called Hansen’s, and started selling energy drinks in the early 2000s.
In 2015, Coca-Cola bought a large stake in Monster Beverage. They also made a deal in which Coca-Cola took over Monster’s remaining juice brands, and Monster took over Coca-Cola’s energy drink brands in exchange.
Monster Beverage stock performed surprisingly well in 2020 despite the pandemic. In fact, they hit their highest ever share price at the end of December. They were able to keep earnings and profits up, something many of their competitors weren’t able to do.
Right now, data indicates that Monster is an excellent stock to buy. There’s still plenty of potential for this momentum to continue and generate a huge return for investors.
Coffee Stocks With Dividends
JM Smucker Co. (NYSE: SJM)
While you may not think of SJM as a coffee company, their stock is actually one of the best ways to invest in at-home coffee consumption. That’s because the company owns several brands of coffee that you can brew at home. These include Folgers, 1850, and Cafe Bustelo. They also own the Dunkin Donuts at-home coffee range, although they are separate from the Dunkin Brands Group.
JM Smucker pays excellent dividends to their investors, with a current yield of 3.15 percent. Their share prices have gone up and down this year, but they did not see a huge drop when the rest of the stock market crashed in March 2020. This is because there was actually more demand for at-home coffee products as local coffee shops closed.
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In addition to their coffee portfolio, JM Smucker produces a range of other popular consumer products. These include their signature jams as well as peanut butter and other popular spreads. They also own several pet food brands.
All of their products are things that consumers can continue to use at home. This is why their stock price has stayed strong this year while others have faltered. Their diversified portfolio also puts them at an advantage. Consumer stocks like Smuckers will continue to be good investments in the coming years, so now is a great time to invest in this company.
Restaurant Brands International (NYSE: QSR)
Restaurant Brands International owns Tim Hortons, which is one of the largest coffee shop chains in Canada. Tim Hortons also has locations in the US, as well as in Europe and Asia.
The first Tim Hortons opened in Ontario in the 1960s. The coffee chain has since become a key part of Canadian culture. In addition to coffee, they also serve donuts and other fast food items.
RBI also owns Burger King and Popeye’s Louisiana Kitchen. Although the restaurant industry has struggled over the past year, this company has managed to stay afloat. This is because all three of their major restaurant brands focus on takeout operations to begin with, so they weren’t as damaged by the stay at home orders and stock market crash as many other restaurant companies.
Restaurant Brands International has a relatively low price to earnings ratio at the moment. This means that their stock is a good value for the price. They also have a three percent dividend payment, although that payout has fluctuated over the years.
Their shares recovered very quickly from the March stock market crash. However, they’re still below their previous peak price of summer 2019. This means there’s still room for the stock to grow.
Best Coffee Penny Stocks
Coffee Holding Co. (NASDAQ: JVA)
The Coffee Holding Company is based in New York and owns several small coffee brands. They have a focus on organic and fair trade coffee, which is becoming increasingly important to consumers.
Their Harmony Bay line of ground coffees brings their authentic gourment coffees into the homes of consumers. Their Organic Products Trading Company works with small organic and fair-trade coffee farmers around the world to import high-quality beans. Finally, they own Sonofresco, a company that makes commercial coffee roasting equipment.
Coffee Holding Co. is currently trading for just over $5 per share. As with any penny stock, it’s important for investors to be aware of volatility before purchasing. This stock recently jumped nearly 10 percent in the space of a few days. This has piqued many people’s interest moving forward into 2021.
Should You Buy Coffee Stocks?
Coffee stocks are a great buy, especially for those who are using a long-term investment strategy. Coffee is part of the broader consumer goods sector, which is generally considered to be recession proof. This is because people typically continue buying consumer goods like coffee even during tough economic times (such as the current pandemic).
For many people, coffee is a key part of a happy morning routine. Many coffee companies have successfully pivoted to focus on ground coffee beans, single-serve coffee pods, and at-home coffee machines. This ensures that their customers can continue enjoying their favorite drinks at home.
Coffee shops had an advantage over full-service restaurants in that they could pivot to takeout very easily during the pandemic. Because of this, they’ve been able to keep their sales up during this difficult time. Coffee shop chains have the potential to increase their earnings even more when they can fully reopen their shops in the future.
In recent years, many consumers have been leaning towards high quality and ethically sourced coffees as part of the third wave coffee movement. Many of the world’s leading coffee stocks have been switching to organic and fair trade beans to keep up with independent coffee retailers.
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Coffee Stocks: Final Thoughts
Coffee stocks are strong investment opportunities that aren’t going away anytime soon. Coffee is a huge part of our culture, which makes coffee companies such a great long-term investment. Coffee companies have performed very well through tough economic times because of the customer loyalty they inspire.
Sarah Foley
Sarah Foley is a freelance content writer based in Chicago. She covers finance as well as real estate, technology, pop culture, and more.
