Tim Hortons Inc. (USA) (THI), Dunkin Brands Group Inc (DNKN): This Coffee Shop Gets a Shot of Caffeine

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Despite not having stores in 12 U.S. states, Dunkin Brands Group Inc (NASDAQ:DNKN) has opened stores in 31 countries outside of the U.S. Key planned international expansion for the company lies in South Korea, the Middle East and emerging markets.

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is the key provider of premium and specialty coffees. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is one of Tim Hortons’ under-appreciated competitors. The company is able to capture customers looking to brew their own coffee, whether it be in the office or at home. The other advantage that Starbucks and Dunkin Donuts have over Tim Hortons is their partnership with Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) to offer their drinks in K-cups.

Starbucks Corporation (NASDAQ:SBUX) is the higher-end coffee shop and likely the most recognized coffee name in North America, if not the world. Starbucks has been aggressive at opening stores in new markets and plans to have more than 20,000 retail stores on six continents by 2014. Beyond coffee, the tea business offers a big market for Starbucks Corporation (NASDAQ:SBUX), especially in Asia.

Recent performance has been strong for Starbucks Corporation (NASDAQ:SBUX), with same-store sales up 2.9% in April compared to a 0.3% decline in February and a 1.3% increase in March. Fiscal 2013 same-store sales are expected to be up 6% in the Americas and an impressive 9% in China.

Bottom line

With Scout Capital and Highbridge Capital pushing for change at Tim Hortons, investors could see management reward shareholders in the interim. Billionaire Jim Simons of Renaissance Technologies is also one of Tim Hortons Inc. (USA) (NYSE:THI)’ big-name hedge fund owners (see Simons’ new stocks).

However, for investors looking to invest in growth, Starbucks Corporation (NASDAQ:SBUX) might be your best bet — it is expected to grow EPS at an impressive 18.7% annualized over the next five years. Dunkin Brands Group Inc (NASDAQ:DNKN) has impressive expected growth at 15.6%, but its valuation appears to be a bit rich for the time being. Dunkin Brands Group Inc (NASDAQ:DNKN) trades at 45.5 times earnings, while Starbucks Corporation (NASDAQ:SBUX) is at 33 times and Tim Hortons at 22 times.

The article This Coffee Shop Gets a Shot of Caffeine originally appeared on Fool.com is written by Marshall Hargrave.

Marshall Hargrave owns shares of Starbucks. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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