5 Best Coffee Stocks to Invest In

[view original post]

In this article, we discuss the 5 most volatile stocks to buy now. If you want to read our detailed analysis of the coffee industry, go directly to the 10 Best Coffee Stocks to Invest In.

5. The J.M. Smucker Company (NYSE:SJM)

Number of Hedge Fund Holders: 33

The J.M. Smucker Company (NYSE:SJM) ranks 5th on the list of 10 best coffee stocks to invest in. The food and beverage manufacturer based in Ohio distributes coffee through its notable brands Folgers, Bustelo, and the Dunkin’ Donuts range. In 2021, The J.M. Smucker Company (NYSE:SJM) reported over $2.37 billion in retails coffee sales.

In July, The J.M. Smucker Company (NYSE:SJM) increased its quarterly dividend to $0.99, a 10% increase from $0.90 per common share, which marks the 20th year in a row that the dividend has increased. Shares of The J.M. Smucker Company (NYSE:SJM) rose 18% in the last twelve months.

On June 4th, Stifel analyst Christopher Growe raised The J.M. Smucker Company’s (NYSE:SJM) price target to $135 from $125 and kept his Hold rating on the stock. The analyst mentioned that the company’s balance sheet remains solid.

The company has a market cap of $14.23 billion and offers a dividend yield of 3.02%. In the fiscal fourth quarter of 2021, The J.M. Smucker Company’s (NYSE:SJM) reported an EPS of $1.89, beating estimates of $1.67 per share. In the fiscal fourth quarter, the company’s revenue was $1.92 billion, beating revenue estimates by $0.04 billion. 

At the end of the first quarter of 2021, 33 hedge funds in the database of Insider Monkey held stakes worth $689 million in The J.M. Smucker Company’s (NYSE:SJM).

Roubaix Capital LLC mentioned J.M. Smucker Company’s (NYSE:SJM) in its Q4 2020 investor letter:

“Companies including J.M Smucker Company (SJM) have seen their sales accelerate to unsustainable levels that are not consistent with their mature end markets. We expect sales to slow and eventually give back some of the one-time gains caused by the unusual circumstances of 2020. Further, we question the sustainability of current peak valuations in the face of likely peak sales. We believe companies with such characteristics could face a combination of negative earnings revisions and lower valuations as the demand reality sets in this year. We also anticipate that companies that have benefited from consumers being homebound will see very challenging comparisons in 2021. No doubt, spending on home improvement and furnishing grew at unsustainable rates in 2020.”

4. Yum China Holdings, Inc. (NYSE:YUMC)

Number of Hedge Fund Holders: 34

Yum China Holdings, Inc. (NYSE:YUMC) ranks 4th on the list of 10 best coffee stocks to invest in. The Texas-based fast-food restaurant operator was founded in 2016. Yum China Holdings, Inc. (NYSE:YUMC) operates restaurant brands such as KFC, Pizza Hut, Taco Bell, and COFFii & JOY.

In 2020, Yum China Holdings, Inc. (NYSE:YUMC) entered a partnership with Italian coffee company Lavazza Group. Yum China Holdings, Inc. (NYSE:YUMC) will help Lavazza expand its operations in China, where they have already launched their first flagship store outside of Italy in Shanghai. Yum China Holdings, Inc. (NYSE:YUMC) has soared 18% in the last twelve months. 

Goldman Sachs analyst Michelle Cheng raised Yum China Holdings, Inc.’s (NYSE:YUMC) price target to $77 from $74 per share and kept his Buy rating. The analyst mentioned that she is confident of store recoveries from strong proven management track records.

The company has a market cap of $26.03 billion and offers a dividend yield of 0.78%. In the second quarter of 2021, Yum China Holdings, Inc. (NYSE:YUMC) reported an adjusted EPS of $0.42, missing estimates of $0.44. The company’s second-quarter revenue came in at $2.45 billion, a 29% increase from the same period of 2020.

There were 34 hedge funds that reported owning stakes in Yum China Holdings, Inc. (NYSE:YUMC) at the end of the first quarter. The total value of these stakes at the end of Q1 is $975 million.

3. Monster Beverage Corporation (NASDAQ:MNST)

Number of Hedge Fund Holders: 45

Monster Beverage Corporation (NASDAQ:MNST) ranks 3rd on the list of 10 best coffee stocks to invest in. The California-based beverage company manufactures energy drinks, through its brands such as Monster Energy, Muscle Monster, Mega Monster, and its coffee brand Java Monster.

On August 3rd, Deutsche Bank analyst Steve Powers raised Monster Beverage Corporation’s (NASDAQ:MNST) price target to $108 from $105 per share and kept his Buy rating on the stock. On July 23rd, the stock was also upgraded by Citi analyst Wendy Nicholson to a Buy rating from a Neutral rating with a $110 price target. 

The company has a market cap of $49.35 billion. In the first quarter of 2021, Monster Beverage Corporation (NASDAQ:MNST) reported an EPS of $0.59, missing estimates by $0.02. However, the company’s first-quarter revenue was $1.24 billion, beating revenue estimates by $0.02 billion. Shares of MNST jumped 19% over the last twelve months.

There were 45 hedge funds that reported owning stakes in Monster Beverage Corporation (NASDAQ:MNST) at the end of the first quarter. The total value of these stakes at the end of Q1 is $2.38 billion.

2. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 61

Starbucks Corporation (NASDAQ:SBUX) ranks 2nd on the list of 10 best coffee stocks to invest in. The Washington-based multinational company operates coffeehouses and roastery reserves worldwide. Starbucks Corporation (NASDAQ:SBUX) is one of the best coffee stocks with over 32,938 retail locations in over 70 countries.

In May, Starbucks Corporation (NASDAQ:SBUX) partnered with clean energy provider Generate. Generate will provide solar energy to local Starbucks stores and up to 24,000 households. Shares of Starbucks Corporation (NASDAQ:SBUX) jumped 4% in the last three months.

On August 3rd, MKM Partners analyst Brett Levy raised Starbucks Corporation’s (NASDAQ:SBUX) price target to $132 per share from $125 per share and kept his Neutral rating on the stock. According to the analyst, Starbucks Corporation (NASDAQ:SBUX) continues to advance into its long-term agenda.

The company has a market cap of $141.93 billion and offers a dividend yield of 1.50%. Starbucks Corporation’s (NASDAQ:SBUX) fiscal third-quarter EPS was $1.01, beating consensus estimates of $0.77. Starbucks Corporation’s (NASDAQ:SBUX) revenue in the fiscal third quarter of 2021 was $7.5 billion, beating estimates of $7.24 billion.

By the end of the first quarter of 2021, 61 hedge funds out of the 866 tracked by Insider Monkey held stakes in Starbucks Corporation (NASDAQ:SBUX), worth roughly $4.44 billion. 

Wedgewood Partners mentioned Starbucks Corporation (NASDAQ:SBUX) in its Q1 2021 investor letter:

Starbucks reported comparable store sales that grew +9% in the U.S. (and up +11% compared to 2019) and up substantially in China as the Company lapped the effects of the pandemic in the region. Starbucks’ financial strength continues to enable investment in store growth, alternative formats, drive-throughs, plus technology to drive higher throughput and further distance itself from smaller, fragmented local and regional competitors that have struggled over the past year. Starbucks has opened over 1000 net new stores over the past 12 months in its international market, primarily in China where it grew its footprint by a double-digit percentage, despite the various obstacles posed by the pandemic. Starbucks will continue to distance itself from competitors and will experience solid growth in the nascent Chinese market while optimizing its more mature U.S. market to drive productivity gains.”

1. McDonald’s Corporation (NYSE:MCD)

Number of Hedge Fund Holders: 67

Topping the list of 10 best coffee stocks to invest in is American fast food company McDonald’s Corporation (NYSE:MCD). The Illinois-based leading foodservice retailer was founded in 1940 and has over 31,000 restaurants located in 119 countries. McDonald’s Corporation (NYSE:MCD) is one of the best coffee stocks to invest in with over 15,000 McCafe outlets worldwide.

In 2019, McDonald’s Corporation (NYSE:MCD) acquired AI-company Apprente. The acquisition supports the company’s customer experience by bolstering its digital, drive-thru, and delivery offerings.

On August 3rd, RBC Capital analyst Christopher Carril raised McDonald’s Corporation (NYSE:MCD) price target to $268 from $263 and kept his Outperform rating on the stock, highlighting the company’s positive Q2 results. The stock has gained 23% in the last twelve months. Shares of MCD also increased 11% in the year to date.

The company has a market cap of $179.16 billion and currently offers a dividend yield of 2.15%. In the second quarter of 2021, McDonald’s Corporation (NYSE:MCD) reported an adjusted EPS of $2.37, beating estimates by $0.26. The company’s second-quarter revenue was $5.89 billion, beating consensus estimates of $5.53 billion. 

At the end of the first quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $3.78 billion in McDonald’s Corporation (NYSE:MCD).

Horizon Kinetics LLC mentioned McDonald’s Corporation (NYSE:MCD) in its Q1 2021 investor letter. Here is what the fund said:

“We were asked about the attractiveness of some well-established, low-price-point restaurant chain, like McDonald’s. It would seem to be a high-quality name for maybe a consumer-income-constrained world. The share price had dropped in lock step with the S&P 500. The problem is that inflation isn’t evenly applied. If it were, if all prices and salaries and rents rose by the same percentage, it’s not a problem. But what if McDonald’s input costs, like wages and rents, as well as the prices it charges its customers, are all rising at a 6% annual rate, but suddenly the cost of beef rises by 12%; and the cost of corn syrup for soda? Food and packaging are roughly 30% of a fast food restaurant’s costs. That could seriously diminish profit margins.

A better business model for such an environment might be a food processor like Archer Daniels Midland. The country can’t exist without an ADM. It would be difficult to have a balanced dinner without some ADM product on your plate, whether it’s the vegetable oil in the salad dressing, the protein meal that fed the chicken, the wheat flour and yeast in your bread, the citric acid in the spice rub, or the probiotics in your health drink. The company has its own trucks, railroad cars, river barges and ocean-going vessels…” (Click here to see the full text)

You can also take a peek at 12 Best Bear Market Stocks to Buy Now and 15 Best Warren Buffett Stocks to Buy Now.