Caffeine if a slightly addictive substance that millions of people start their day with across the world. For years, people have been turning to caffeine to wake them up or help them stay alert. Caffeine can be found in coffee, energy shots and other supplements. While its health risks have been questioned, no one can deny its impact in our daily lives. Let’s look as some companies that specialize in caffeinated products to see if they’ll give your portfolio an energy boost or leave it with a headache.
Coffee takes over the galaxy
Starbucks Corporation (NASDAQ:SBUX) is the earth’s largest coffee chain and has a goal of becoming the world’s most admired, respected and enduring brand. Although it has recently been ranked the 5th most admired company in the world, Starbucks has hit a rough spot in China. The Starbucks located in the Bank of China Tower was recently caught using water from the bathroom to brew its coffee. While the water was safe to drink, this move could hurt Starbucks’ reputation in China. China is Starbucks’ second largest market, and the country is a vital part of the company’s future growth plan. The coffee chain plans on having 1,500 locations in China by 2015 and will market heavily to the rapidly growing Chinese middle class.
In addition to international expansion, Starbucks Corporation (NASDAQ:SBUX) is driving growth through technological advances and drive-through stores. The Starbucks mobile app currently has 10 million users. The app allows users to purchase coffee and gain free items through a rewards system. Starbucks has identified its mobile program as a key competitive advantage that the company has over competitors.
Drive-through windows in Starbucks Corporation (NASDAQ:SBUX) stores have contributed to new store growth in the U.S. With impressive margins, drive-through windows allow customers a more convenient way to order their coffee. Starbucks sees most of its U.S. new store growth coming from these drive–throughs in years to come.
With quarterly revenue growth of 11.3% leading to earnings growth of 26%, Starbucks Corporation (NASDAQ:SBUX) is successfully improving on an already impressive net income of $14.02 billion. With the company’s future expansion plans and strong brand, I don’t see the coffee giant slowing down for a long time. Wait for the China situation to blow over, then I’d say this is a buy.
You need coffee to dunk
Despite its name, Dunkin’ Donuts made 58% of its reported sales from coffee and other beverages in 2012. Owned by the Dunkin Brands Group Inc (NASDAQ:DNKN), the doughnut shop was recently ranked #1 in customer loyalty in the coffee category by the Brand Keys’ Customer Loyalty Engagement Index for the 7th year in a row. Dunkin’ recognizes that breakfast is a ritualistic meal that people will eat everyday, and it has worked to become part of this routine. This is why Dunkin’ was not hurt during 2008 and has a beta of 0.48.