Every investor should be always on the lookout for diversifying their portfolio. We have all heard that old saying, “Never put all your eggs in one basket”. By investing in a variety of sectors, you can ensure that even if some of the markets crash, at least some of your investments will survive.
For hundreds of years, coffee has been a prized commodity. With each passing year, people are getting more and more dedicated to their love of coffee. There is no better time to invest in the coffee business than now, as the demand for coffee continues to rise year after year. Take a bite out of this global phenomenon by investing in coffee stocks.
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What Are Coffee Stocks?
Coffee being the first thing that comes to the mind of millions of people in the morning, it is not surprising that it is a hundred billion dollar industry.
Coffee stocks are stocks of companies that are related to coffee production. Top Coffee Stocks are from large and well-known companies that are involved in the coffee industry.
Under the umbrellas of these big coffee conglomerates, you will find numerous companies that are involved in anything from coffee bean production to running an international chain of cafes.
Trading stocks can be a high-risk endeavor if you are not well informed about the coffee market. By doing a lot of research and learning as much as you can about the market, you can get high returns from your investments.
Should You Invest In Coffee Stocks?
Stock trade is all about strategic investments to help you diversify your profile with profitable stocks. Coffee is addictive and unless there is some drastic change in the world order, the demand for coffee will never go away.
Coffee is precisely the kind of commodity that investors love. It is habit-forming and irresistible. Coffee is not a controversial stimulant and has plenty of health benefits, which means that it is a product that is likely to stay stable in the market in terms of demand.
Within the coffee industry, you will find companies that produce products that are consumer staples, but you will also find companies that produce fancy non-essentials.
For example, instant coffee and supermarket coffee beans are good examples of consumer staples, whereas coffee shops and another coffee-related non-essential fall into consumer discretionary products.
Top Coffee Stocks
Before deciding to invest in any industry, you have to do enough research to learn as much as possible about the market. Let’s take a look at some of the best coffee stocks available in the current market.
Keurig Dr Pepper (NASDAQ: KDP)
Back in 2018, Green Mountain Coffee merged with Dr Pepper Snapple Group and created Keurig Dr Pepper. This merger has created a mega-corporation that can satisfy any consumer beverage needs.
Two years ago, the entire world was heavily dominated by the popularity of coffee shops. Even though it was a first-world trend, the rising income of the middle class in the second and third-world world and the media was contributing to this trend.
However, the pandemic changed everything. As the majority of the world population got stuck in their homes, another coffee trend emerged: Making cafe standard coffee at home. As the popularity of homemade coffee increased, so did the popularity of coffee machines and beans.
Keurig Dr Pepper group capitalized on the trend and their sales increased as the demand for coffee machines and beans rose significantly. This is a great time to invest in their stocks as they are enjoying a stable position in the market, and stables stocks are great for investments.
Starbucks Corp. (NASDAQ: SBUX)
If you walk down the streets of North America or Western Europe and ask anyone about Starbucks, it will be difficult to find one person who doesn’t know that name.
Starbucks Corp., the owner of the social media’s favorite coffee shop Starbucks Coffee Shop, has been one key reason why coffee is so famous in the first world. They have got an entire generation of humans obsessed with coffee and this powerful entity has been fuelled by word of mouth, or better yet, photos in social media.
They were one of the few corporations that made an easy transition from in-house services to takeaways and home deliveries, which helped them recover from the effects of the pandemic quickly.
If you consider investing in the SBUX stocks. These stocks are often expensive to buy but it is worth it. Even though the prices fall and rise, you know that their stocks are bound to come up again due to the overwhelming popularity of their products and services.
JM Smucker Co. (NYSE: SJM)
JM Smucker Co. has dominated the American home coffee market with its numerous brands that produce coffee like instant coffee, ground beans, etc. These consumer goods have become a staple for many and these products are quite popular. They also own the donut giant, Dunkin Donuts, with 11,300 restaurants worldwide.
The SJM stocks did very well during the pandemic as their market was already home-based. With home coffee consumption seeing its all-time high, the company enjoyed a steady rise and still has a 3% growth rate post-pandemic.
Since their company is so diversified, their stocks perform more stably. They have products from various sectors of the food market, including pet foods! They are also one of the highest payers of dividends (2.64%), so investors would like to capitalize on this opportunity.
With more people interested in making coffee at home and the possibility of the Covid-19 situation getting worse at any time, investing in the home coffee/food industry is quite ideal.
Nestle (OTC: NSRGY)
If you are looking to invest in something truly great, Nestle is the right company for you. Nestle dominates the global coffee industry, particularly because they have monopolized the Asian coffee market.
Nestle’s top-selling products are powdered and liquid beverages, including their famous instant coffee(Nescafe) and coffee pods, tea(Nestea), and Nesquik (Flavored milk powder, syrup, and drinks). They are often people’s number one choice when it comes to affordable caffeine fixes.
Nestle is global and has a 331.95 Billion dollar market value. Despite the market crash in march 2020, Nestle has seen a steady rise and has been enjoying an organic growth of 9.5% for the last three months.
The best strategy they use is milking on their already established and popular brands like Maggi, Nescafe, Milo, etc. Nestle rebrand and use rejuvenating strategies on their popular products and emp up their sales, and this move always falls through and brings them profit.
Restaurant Brands International (NYSE: QSR)
People say that you will find Timmy’s at the corner of every street in Canada, and they are not wrong. Tim Horton dominates the Canadian population and fuels their day. Even as the coffee house and restaurant industry got hit hard during the pandemic, the restaurants under the RBI bounced back fast.
Since they also own chain restaurant brands like Burger King and Popeye’s, your stocks won’t just depend on coffee. They dominate the Canadian coffee culture and have become the must-have for most Canadians, successfully turning this non-essential into an essential.
Now that more restaurants are opening up and people are starting to get out of their houses, the sales are bound to increase. The investors love the over 3% dividends offered to investors, however, the money does fluctuate according to the market position.
Monster Beverage (NASDAQ: MNST)
You might be wondering why an energy drink brand is relevant to the coffee industry, and you will be surprised by where the connection lies.
Recently, Coke has announced that they are going to move out of the North American energy drink market, which will mean that a huge portion of the market will be up for grabs.
Monster has created an energy drink fusion that is something between canned coffee, cream soda, and an energy drink. This coffee product is unique and has gained popularity since its conception.
They will capitalize on the lack of competition in the market and do better in the industry. Their coffee product will attract energy drink consumers and coffee lovers alike and is bound to increase their sales in the market where there is lower competition.
So, keep an eye out for their stocks, as they are set to become a more lucrative investment in the future.
Final Thoughts
Coffee stocks can be the right investment for you, as long as you know which company is right for you. With enough knowledge, you can invest at the right time and also trade stocks, if you do know what you are doing. A coffee lover would love to invest in something they are passionate about, which can also be profitable if you know what you are doing.
