Top Coffee Stocks for Q4 2020

The coffee industry is a complex and multilayered one, including everything from producers and distributors to processors, wholesalers, and retailers. Notable names in the coffee industry include Starbucks Corp. (SBUX), J.M. Smucker Co. (SJM), and Restaurant Brands International Inc. (QSR). There is no single sector or ETF for the coffee industry, and coffee-related stocks can be found both in the consumer discretionary and consumer staples sectors. In general, retailers and coffee shops are part of the consumer discretionary group, and producers and packaged food companies are part of the consumer staples group. These sectors have performed very differently in the past 12 months. The Consumer Staples Select Sector SPDR ETF (XLP) has underperformed the broader market by posting a 9.6% total return, while the Consumer Discretionary Select Sector SPDR ETF (XLY) has outperformed, with a total return of 21.3%. The Russell 1000 has risen 15.2% during this period. These market performance numbers are as of September 14 and statistics in the tables below are as of September 15.

Here are the top 3 coffee stocks with the best value, growth or least profit decline, and momentum.

Best Value Coffee Stocks

These are the coffee stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Source: YCharts

• J.M. Smucker Co.: Consumer staples stock J.M. Smucker manufactures food products for global sale. Best known for its fruit spreads and peanut butters, also makes coffee products. On August 25 the company reported results for its Q1 FY 2021 ended July 31, including a year-over-year (YOY) net sales increase of 11% and adjusted earnings per share rose 53%. J.M. Smucker increased its FY 2021 outlook in response to these results, which it attributed to strong performance in its coffee and consumer foods portfolios during the COVID-19 pandemic.
• Nestlé S.A.: Consumer staples stock Nestlé is a Switzerland-based multinational packaged food company offering a wide variety of products ranging from baby food and bottled water to dairy products, frozen food, coffee, and more. On September 14, the company announced that it was commencing a friendly tender offer for Aimmune Therapeutics (AIMT), a biopharmaceutical company focused on treatments for food allergies. Aimmune Therapeutics agreed to the deal in August.
• Restaurant Brands International Inc.: Part of the consumer discretionary sector, Restaurant Brands International is a Canada-based holding company born out of the 2014 merger of Burger King and Tim Hortons. The company also owns Popeyes, the Louisiana fried chicken franchise. Tim Hortons remains one of the largest coffee shop and restaurant chains in Canada.

Coffee Stocks With the Most Profit Growth or Least Profit Decline

These are the coffee stocks with the highest YOY earnings per share (EPS) growth or lowest EPS decline for the most recent quarter. A company’s ability to maintain profitability in a difficult business environment can be a sign of good management and/or a strong business model. Only one company in our screen saw earnings growth over this time period. The other reported the smallest decline in earnings compared to other coffee companies.

Source: YCharts

• J.M. Smucker Co.: See above for company description.
• Keurig Dr Pepper Inc.: Keurig Dr Pepper is a consumer staples company that makes and distributes non-alcoholic beverage products including coffee. The company serves customers throughout North America. On September 8, the company announced that it would transfer its stock exchange listing from the New York Stock Exchange to the Nasdaq on September 21, trading under the same "KDP" ticker.
• Nestlé S.A.: See above for company description.

Coffee Stocks with the Most Momentum

These are the coffee stocks that had the highest total return over the last 12 months.

Source: YCharts

• Nestlé S.A.: See above for company description.
• J.M. Smucker Co.: See above for company description.
• Keurig Dr Pepper Inc.: See above for company description.