Top Coffee Stocks for Q1 2020

The coffee industry is a complex and multilayered one, including everything from producers and distributors to processors, wholesalers, and retailers, including Starbucks Corp. (SBUX), JM Smucker Co. (SJM) and Restaurant Brands International Inc. (QSR). There is no single benchmark for coffee and there is no coffee-dedicated ETF. The industry could be classified somewhere in between the consumer discretionary and consumer staples sectors. One might think of retailers and coffee shops as being part of the industry associated with the consumer discretionary group, and of producers like Nestle SA (NSRGY) as being part of the consumer staples sector. In the 12-month trailing period, the Consumer Discretionary Select Sector SPDR ETF (XLY) saw a price change of 21.6%, while the Consumer Staples Select Sector SPDR ETF (XLP) grew by 22.0%. Both underperformed the market overall, as the S&P 500 saw a price change of 26.5% in the same period. All figures are as of January 12, 2020.

Here are the top 3 coffee stocks with the best value, the fastest earnings growth, and the most momentum.

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.

• JM Smucker Co.: JM Smucker manufactures food products for global sale. Although perhaps best known for its fruit spreads, peanut butters, shortenings and oils, the company also makes coffee products. The company's most recent quarter, Q2 FY 2020, saw a 10% increase in cash from operations year-over-year (YOY).
• Restaurant Brands International Inc.: Canadian holding company Restaurant Brands International was born out of the 2014 merger of Burger King and Tim Hortons. Today, the company also owns Popeyes Louisiana Chicken. Tim Hortons remains one of the largest coffee shop and restaurant chains in Canada.
• Dunkin' Brands Group Inc.: Dunkin' Brands Group franchises locations of Dunkin' (formerly "Dunkin' Donuts") and Baskin-Robbins. In Q3 2019, Dunkin' Brands added 55 new Dunkin' locations across the U.S.

These are the coffee stocks with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.

• Keurig Dr Pepper Inc.: Keurig Dr Pepper makes and distributes non-alcoholic beverage products including coffee. The company serves customers throughout North America.
• Restaurant Brands International Inc.: See company description above.
• Starbucks Corp.: A company that needs no introduction, Starbucks has a presence in 75 countries worldwide and is a global leader in coffee roasting, marketing, and retailing. The company's most recent quarter, ending September 29, 2019, saw a 14% quarterly dividend increase to $0.41 per share.

These are the coffee stocks that had the highest price change the last 12 months.

• Starbucks Corp.: See company description above.
• Nestle SA: Swiss conglomerate Nestle has been the largest food company in the world based on revenue for several years. The company produces a wide variety of products ranging from baby food and bottled water to dairy products, frozen food, coffee, and more. At the end of 2019 the company announced it had completed a CHF$20 billion share buyback program and that it would start another program of up to the same size.
• Restaurant Brands International Inc.: See company description above.