Top Coffee Stocks for Q3 2021

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 two sectors have performed differently in the past 12 months, though both have underperformed the broader market. The Consumer Staples Select Sector SPDR ETF (XLP) has posted a 20.2% total return, while the Consumer Discretionary Select Sector SPDR ETF (XLY) has provided a total return of 29.4%. The Russell 1000 has risen 34.7%. These market performance numbers and all statistics in the tables below are as of June 7, 2021.

Here are the top 3 coffee stocks with the best value, the fastest growth, and the most 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.: J.M. Smucker, a consumer staples stock, manufactures food products for global sale. The company is best known for its fruit spreads, peanut butters, and shortenings and oils. The company announced on June 3 results for its Q4 FY 2021, ended April 30, including a 31.2% year-over-year (YOY) decline in operating income and an 8.2% YOY drop in net sales. The decline in sales was due in part to J.M. Smucker's U.S. Retail Pet Food and International segments.
• Nestlé SA: 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 April 30, Nestlé announced it would acquire the core brands of The Bountiful Co., including vitamin and supplement brands such as Puritan's Pride and Nature's Bounty, for $5.75 billion. The acquisition is expected to close in the second half of 2021.
• 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. Keurig Dr. Pepper announced on May 25 that its board of directors had declared a quarterly dividend of $0.1875 per common share. The dividend, representing an increase of 25% over the previous quarterly dividend, will be paid on July 15 to shareholders of record as of July 1, 2021.

Fastest Growing Coffee Stocks

These are the top coffee stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Source: YCharts

• Keurig Dr. Pepper Inc.: See above for company description.
• Starbucks Corp.: Starbucks is a consumer discretionary stock. It retails, roasts, and sells its own brand of specialty coffee. The company operates retail locations throughout the world and sells whole bean coffee through various channels. Starbucks also offers other beverages, complementary food, as well as a focused selection of merchandise. Starbucks said in late April after announcing Q1 earnings that it expects profits to rise in 2021 as consumers return to its more efficiently operated coffee houses as the economy opens up.
• 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, one of the largest coffee shop and restaurant chains in Canada. The company also owns Popeyes, the Louisiana fried chicken franchise.

Coffee Stocks with the Most Momentum

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

Source: YCharts

• Starbucks Corp.: See above for company description.
• J.M. Smucker Co.: See above for company description.
• Keurig Dr. Pepper Inc.: See above for company description.

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