10 Best Coffee Stocks to Invest In

Published on September 23, 2022 at 9:09 am by Usman Kabir in Hedge Funds, News

In this article, we discuss the 10 best coffee stocks to invest in. If you want to read about some more coffee stocks, go directly to 5 Best Coffee Stocks to Invest In.

The coffee sector was hit hard by the COVID-19 crisis and has been struggling to reach pre-pandemic levels in terms of revenue and sales since. As virus restrictions are lifted in most parts of the globe and life returns to normal, coffee chains around the world are making a strong comeback. According to a report by World Coffee Portal, the number of coffee stores in the United States has increased beyond levels seen in 2020. The US is the largest consumer of the beverage in the world.

Per the report, there are 38,411 branded coffee shops in the US, up 2.8% compared to the number of stores before the advent of the coronavirus pandemic. The sales numbers for the industry are also improving. The report reveals that sales by branded coffee shops in the North American country increased 10% between June 2021 and June 2022, reaching closer to $46 billion in value. This represents 96% of the pre-pandemic sales figures. Large coffee retailers have been one of the biggest beneficiaries of this boom.

Starbucks Corporation (NASDAQ:SBUX), Monster Beverage Corporation (NASDAQ:MNST), and McDonald’s Corporation (NYSE:MCD) have all increased their coffee presence in the United States over the past few months. World Coffee Portal has highlighted that the trends in the US are indicative of a change on the global level, with 46% of coffee chains worldwide reaching sales growth of 5% or more between June 2021 and June 2022. However, ongoing staff shortages and a cost-of-living crisis represent significant short-to-medium term challenges for the industry.

Our Methodology

The companies that operate in the coffee and beverages sector were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

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Best Coffee Stocks to Invest In

10. Coffee Holdings Co., Inc. (NASDAQ:JVA)

Number of Hedge Fund Holders: 2

Coffee Holdings Co., Inc. (NASDAQ:JVA) manufactures, roasts, packages, markets, and distributes roasted and blended coffees. On September 14, the company posted earnings for the third fiscal quarter, reporting earnings per share of $0.02. The revenue over the period was $17 million, up over 25% compared to the revenue over the same period last year. The firm said that freight factors increased by approximately $500,000 during the third quarter of 2022.

Coffee Holdings Co., Inc. (NASDAQ:JVA) was founded in 1971 and is based in New York. It supplies private label coffee under more than 21 labels to wholesalers and retailers in cans, brick packages, and instant sachets of various sizes.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Coffee Holdings Co., Inc. (NASDAQ:JVA), with 389,664 shares worth more than $951,000.

Just like Starbucks Corporation (NASDAQ:SBUX), Monster Beverage Corporation (NASDAQ:MNST), and McDonald’s Corporation (NYSE:MCD), Coffee Holdings Co., Inc. (NASDAQ:JVA) is one of the best coffee stocks to invest in.

9. Farmer Bros. Co. (NASDAQ:FARM)

Number of Hedge Fund Holders: 6

Farmer Bros. Co. (NASDAQ:FARM) engages in the roasting, wholesale, equipment servicing, and distribution of coffee, tea, and other beverage products in the United States. Farmer Bros. Co. (NASDAQ:FARM) is one of the most prominent coffee stocks to invest in. On September 19, investment firm JCP Investments disclosed that it had bought a close to 7% stake in the coffee company. The holding consists of nearly 1.3 million shares in the firm. The coffee company is based in Texas and was founded in 1912.

On August 31, Farmer Bros. Co. (NASDAQ:FARM) announced the successful completion of a credit facility refinancing with Wells Fargo. The refinancing is expected to generate $2 million in annual cash savings for the company.

At the end of the second quarter of 2022, 6 hedge funds in the database of Insider Monkey held stakes worth $8.3 million in Farmer Bros. Co. (NASDAQ:FARM), compared to 6 in the previous quarter worth $13.8 million.

In its Q2 2022 investor letter, Choice Equities, an asset management firm, highlighted a few stocks and Farmer Bros. Co. (NASDAQ:FARM) was one of them. Here is what the fund said:

“Farmer Bros. Co. (NASDAQ:FARM) remains unloved and overlooked. I recently had the opportunity to visit with the company and some other shareholders while touring the new plant in Dallas, TX. Reviewing the visit on my flight home, I had two primary takeaways. First, this company’s operating environment has been exceptionally difficult since this management team took over in late 2019. A great number of the company’s customers were closed due to the pandemic, while coffee-focused day parts like breakfast and locations like hotels have been slower to return to normal purchasing patterns than others.

Though the external environment has not cooperated, execution on items within the company’s control have been more promising, as management has positioned the company to prosper when normalcy returns. Second, the company’s market cap of $<90M seems quite at odds with the assets at hand and quality and depth of the management team. After accounting for liabilities and the network value including items such as land that are not on the balance sheet at updated prices, shares trade well underneath net asset value (…read more)

8. Restaurant Brands International Inc. (NYSE:QSR)

Number of Hedge Fund Holders: 20

Restaurant Brands International Inc. (NYSE:QSR) operates as a quick service restaurant company. The firm is also among the best coffee stocks to invest in. The company has an impressive dividend profile. It has consistently paid a dividend to shareholders for the past six years. These payouts have also registered consistent growth in these six years. On August 8, the firm declared a quarterly dividend of $0.54 per share, in line with previous. The forward yield was a solid 3.64%.

On September 9, Restaurant Brands International Inc. (NYSE:QSR) announced that it would be investing $400 million in the Burger King brand to accelerate growth in the US. Tom Curtis, the president of Burger King in the North American region, made the announcement.

At the end of the second quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Restaurant Brands International Inc. (NYSE:QSR), compared to 23 in the previous quarter worth $1.8 billion.

7. SunOpta Inc. (NASDAQ:STKL)

Number of Hedge Fund Holders: 21

SunOpta Inc. (NASDAQ:STKL) manufactures and sells plant-based and fruit-based food and beverage products. The company offers oat milk, soy milk, and almond milk, which is used by multiple coffeehouses, making it one of the top coffee stocks to invest in. On August 10, the company posted earnings for the second fiscal quarter, reporting earnings per share of $0.03. The revenue over the period was $243 million, up over 20% compared to the revenue over the same period last year and beating estimates by $23 million. The firm said that revenue for the 2022 fiscal year would be in the $930 million to $960 million range.

On August 12, Canaccord analyst Bobby Burleson maintained a Buy rating on SunOpta Inc. (NASDAQ:STKL) stock and raised the price target to $14 from $12, noting the firm reported a solid beat on expectations amid record-breaking performance in the plant-based section.

Among the hedge funds being tracked by Insider Monkey, Los Angeles-based investment firm Oaktree Capital Management is a leading shareholder in SunOpta Inc. (NASDAQ:STKL), with 20.7 million shares worth more than $161 million.

In its Q2 2022 investor letter, Heartland Advisors, an asset management firm, highlighted a few stocks and SunOpta Inc. (NASDAQ:STKL) was one of them. Here is what the fund said:

“SunOpta (NASDAQ:STKL) is a plant-based food and beverage company with its primary product being plant-based milks of various types (almond, oat, soy, etc.). Heartland believes STKL is a highly attractive franchise due to its strong secular growth, excellent management team, and its upcoming, near-term deployment of significant capacity additions that have yet to be reflected in the company’s economics. Normally, investors would have to pay dearly for these characteristics, but due to the aforementioned inflation concerns along with industry-wide supply chain issues, we were able to purchase shares at metrics that fit our criteria. We viewed these issues as transitory. Q1 started to affirm this investment case and provided increased visibility to the firm’s long-term growth prospects. Despite a material runup in the stock price, we continue our favorable view as STKL trades at a meaningful discount to lower-growth food and beverage peers, which have much lesser-competitive positions and barriers to entry.”

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

Number of Hedge Fund Holders: 25

Yum China Holdings, Inc. (NYSE:YUMC) owns, operates, and franchises restaurants in China. It is one of the elite coffee stocks to invest in. On July 28, the company posted earnings for the second quarter of 2022, reporting earnings per share of $0.20. The revenue over the period was $2.1 billion.

On July 26, investment advisory CMB International Yum upgraded Yum China Holdings, Inc. (NYSE:YUMC) to Buy from Hold with a HK$426.17 price target, up from HK$287.57. Analyst Walter Woo issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, London-based firm GuardCap Asset Management is a leading shareholder in Yum China Holdings, Inc. (NYSE:YUMC), with 9 million shares worth more than $438 million.

Along with Starbucks Corporation (NASDAQ:SBUX), Monster Beverage Corporation (NASDAQ:MNST), and McDonald’s Corporation (NYSE:MCD), Yum China Holdings, Inc. (NYSE:YUMC) is one of the best coffee stocks to invest in.

In its Q2 2022 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and Yum China Holdings, Inc. (NYSE:YUMC) was one of them. Here is what the fund said:

“Yum China Holdings, Inc. (NYSE:YUMC) – With the world emerging after two years of COVID, the extreme Shanghai lockdowns caught the company and frankly us a little by surprise. While the proposition for domestic KFC roll-out remains intact Yum China has not behaved like a Stalwart this year.”

Click to continue reading and see 5 Best Coffee Stocks to Invest In.

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