How To Invest In Coffee Stocks In 2023

A Step-By-Step Guide On How To Invest In Coffee Stocks In 2023

To invest in coffee stocks, you can consider purchasing shares in individual coffee companies. Some notable coffee stocks to explore in 2023 are:

• Starbucks (SBUX)
• Restaurant Brands International Inc (QSR)
• Keurig Dr Pepper (KDP)
• Nestlé (NSRGF)
• Dutch Bros (BROS)
• J.M. Smucker (SJM)
• Coffee Holding Co., Inc. (JVA)
• Farmer Brothers Company (FARM)

In this article, we will also discuss the potential of coffee as an investment and the availability of coffee-related ETFs.

Photo by Mike Kenneally on Unsplash

Is Investing In Coffee Stocks A Good Investment?

The coffee industry is experiencing rapid growth and offers a compelling investment opportunity. According to Statista, with projected revenues of US$495.50 billion in 2023 and an expected annual growth rate of 4.47% (CAGR 2023–2025), the market shows significant potential:

• The United States leads in revenue generation, with US$95,58 billion expected in 2023
• Out-of-home consumption is a driving force, accounting for 84% of spending and 21% of volume consumption by 2025
• With an estimated market volume of 7.78 billion kg by 2025 and an average consumption of 0.98kg per person in 2023, coffee stocks present an attractive investment opportunity

List Of Coffee Stocks For May 2023

Investors have various options for purchasing shares in coffee-related companies. Consider the following renowned coffee stocks:

1. Starbucks (SBUX): As a global leader in the coffee industry, Starbucks presents an excellent investment opportunity.
2. Restaurant Brands International Inc (QSR): Known for its fast-food brands (Burger King), Restaurant Brands International Inc also owns Tim Hortons, a prominent coffee chain. Investing in QSR offers exposure to the coffee industry in addition to other popular fast-food brands.
3. Keurig Dr Pepper (KDP): Keurig Dr Pepper is a well-known beverage company that manufactures the popular Keurig single-serve coffee machines. With a diverse portfolio of coffee and beverage brands, KDP provides potential growth opportunities.
4. Nestlé (NSRGF): Nestlé, a global food and beverage company, has a significant presence in the coffee market. Investing in Nestlé grants access to its diverse coffee brands, including Nescafé and Nespresso.
5. Dutch Bros (BROS): Dutch Bros, a drive-thru coffee chain, recently entered the stock market. This newcomer has attracted attention, particularly among coffee enthusiasts and loyal customers.
6. J.M. Smucker (SJM): J.M. Smucker, a consumer goods company, has a strong presence in the coffee industry. Its brands include Folgers and Dunkin’ Donuts.
7. Coffee Holding Co., Inc. (JVA): Coffee Holding Co., Inc. is a leading integrated wholesale coffee roaster and dealer in the United States. With a focus on sourcing, roasting, and selling coffee products, JVA offers investors an opportunity to invest directly in the coffee industry.
8. Farmer Brothers Company (FARM): Farmer Brothers Company is a renowned coffee manufacturer and distributor, serving various sectors including foodservice, hospitality, and convenience stores.

Investors seeking exposure to the coffee market can also consider purchasing Exchange Traded Notes (ETNs). ETNs are financial instruments that offer a way to track the performance of an underlying index or asset, such as the coffee market, without directly owning the underlying assets.

What Are The Best Coffee Stocks To Buy?

Among the different coffee stocks available to investors, careful research should be done in order to find the stocks that will provide the best investment return.

How can you find the best coffee stocks to buy?

1. Visit StockViz (it is free) and head to the Benchmark tab
2. Create your group of coffee stocks, you can start from the one listed above in this article
3. Compare all coffee stocks against each other

To help you out, we did the exercise ourselves. Here is how each of these coffee stocks perform against each other relative to their price to earnings ratio:

• Note that SBUX and KDP have shown significant revenue per share growth over the past three years. However, as of May 2023, these stocks are also valued relatively higher with a price-to-earnings (PE) ratio of 38x and 35x, respectively
• Looking at the the free cash flow (FCF) yield, it is worth mentioning that FARM and JVA reported negative FCF in their most recent fiscal years
• In terms of the EBITDA ratio, KDP, QSR, SJM, and SBUX emerge as the top performers highlighting their strong operational efficiency and profitability

Based on the analysis conducted on StockViz, KDP, QSR, SJM, and SBUX appear to be more financially healthy options for investment in the coffee industry.

Remember, it is crucial to consider not only the financial metrics but also other factors such as market conditions, company strategies, and future growth prospects when making investment decisions. Here are 3 steps you should follow to find out if a stock is overvalued. Conducting thorough research and consulting with a financial advisor is recommended to make well-informed investment choices in the coffee stock market.

It is important to keep in mind that this article is not intended as specific investment advice, but rather serves to educate investors about potential investment strategies and tools. As always, it is essential to conduct thorough research and analysis before making any investment decisions, and to consult with a professional financial advisor or broker if necessary.