The price of coffee futures is at a five-year low as of April 18, 2019, and investors would be wise to consider the upside potential of an industry that is unlikely to go anywhere anytime soon. The price for a pound is around $0.89 currently, down from a high of $2.20 in mid-2014.
A rise in prices is bad news if you can't function without your morning cup of joe, but it's good news if you're invested in coffee stocks. And if you're not currently in the market but think you might want to jump in, here are three top coffee stocks for you to consider for 2019 and 2020.
All prices have been updated April 18, 2019.
A company which needs no introduction, Starbucks has a presence in 75 countries worldwide and is a global leader in coffee roasting, marketing, and retailing. With over 29,324 retail outlets, it's tough to avoid the chain's commanding presence. Starbucks has a market cap of $94.28 billion and raked in annual revenue of $24.72 billion in 2018 with a net income of $2.88 billion. At current share prices of $75.87, the stock is trading at about 31.36 times earnings.
In August 2018, Starbucks announced a $7.15 billion deal with Nestle for Nestle to market Starbucks products around the world, outside of its cafes; the deal is expected to considerably boost revenue on a global scale.
Smucker's might be a name you mostly associate with jellies and jams, but it also owns major coffee brands including Folger’s, Dunkin' Donuts (under a licensing agreement through 2034), Cafe Bustelo, Kava, Medaglia D’Oro, and Pilon.
With a market cap of $13.675 billion and an annual revenue in 2018 of $7.357 billion, Smucker's has a significant presence in the U.S. coffee market. The stock is currently trading at around $120, about even for the year. However, forecasts are for improved profitability—for both the company and the sector—going forward.
The stock price equates to a P/E ratio of 21.72 and, as of April 2019, pays a dividend of 2.83%. A consensus of analysts rate it a "hold."
With over 3,100 restaurants outside the U.S. alone, Dunkin' Donuts is a solid player in the coffee space. The company has a market cap of $6.279 billion and annual revenues of nearly $900 million.
The rise in revenue was due mostly to higher royalty payments from system-wide sales growth and a jump in advertising fees. Dunkin' has been competing strongly with rival Starbucks, and the stock price has been on the rise in 2019, gaining nearly 20% year-to-date.
At $75.98 per share, the stock trades at more than 28 times earnings. Although Dunkin' licenses its coffee brand to Smucker's, the company sold over 1.7 billion cups of coffee in 2016, or roughly 30 cups every second—a significant revenue driver.
Dunkin' is also a solid dividend stock, paying 1.97%. Dunkin' stock is currently trading at about $76, above its 12-month low of $60. A consensus of analysts rate it a "hold."