In this article, we will take a look at the 5 best coffee stocks to invest in. To see more such companies, go directly to 11 Best Coffee Stocks to Invest In.
5. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 40
The Kraft Heinz Company (NASDAQ:KHC) owns Maxwell House coffee brand, one of the most famous coffee products in the US. The Kraft Heinz Company (NASDAQ:KHC) recently upped its outlook for adjusted EPS for full-year 2023 to be in the range of $2.91 to $2.99, compared to the previous range of $2.83 to $2.91.
As of the end of the third quarter of 2023, 40 hedge funds in Insider Monkey’s database of 910 funds had stakes in The Kraft Heinz Company (NASDAQ:KHC). The biggest stakeholder of The Kraft Heinz Company (NASDAQ:KHC) was Warren Buffett’s Berkshire Hathaway which owns a stake worth about $11 billion in the company.
4. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 40
Beverage giant Keurig Dr Pepper Inc. (NASDAQ:KDP) sells coffee products such as K-Cup® pods and Barista Prima.
As of the end of the third quarter of 2023, 40 hedge funds had stakes in Keurig Dr Pepper Inc. (NASDAQ:KDP), as per Insider Monkey’s database of hedge funds.
3. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 41
The Kroger Co. (NYSE:KR) sells its own branded coffee in the US. As of the end of the third quarter of 2023, 41 hedge funds tracked by Insider Monkey had stakes in Kroger. The most significant stakeholder of The Kroger Co. (NYSE:KR) was Warren Buffett’s Berkshire Hathaway which had a $2.2 billion stake in the company.
Oakmark Equity and Income Fund made the following comment about The Kroger Co. (NYSE:KR) in its Q3 2023 investor letter:
“The Kroger Co. (NYSE:KR) is the second-largest grocery retailer in America behind only Walmart. Although the grocery industry is highly competitive, Kroger’s scale advantages allow it to offer a more compelling value proposition than smaller peers and earn higher returns on capital. In recent years, the market has assigned Kroger a lower multiple due to concerns that e-commerce would disrupt traditional brick-and-mortar grocery. However, we believe the company’s performance through the pandemic highlighted that its store footprint, distribution infrastructure, technology investments and strong brand all position the company well for a world with higher online grocery adoption. The stock trades for just 10x our estimate of next year’s EPS, which we believe is attractive given Kroger’s competitive positioning and earnings growth outlook. The pending merger with Albertsons has the potential to drive accelerated earnings growth and further scale advantages. If the merger is not approved, the company will have the capacity to return approximately 25% of its market cap to shareholders.”
2. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 60
Starbucks Corporation (NASDAQ:SBUX) ranks 2nd in our list of the best coffee stocks to buy according to hedge funds. Earlier this month Starbucks Corporation (NASDAQ:SBUX) posted fiscal Q4 results. Adjusted EPS in the quarter came in at $1.06, beating estimates by $0.09. Revenue in the quarter jumped about 11.4% year over year to $9.37 billion, beating estimates by $90 million.
ClearBridge Multi Cap Growth Strategy made the following comment about Starbucks Corporation (NASDAQ:SBUX) in its Q2 2023 investor letter:
“Top heavy leadership has overshadowed weakness across much of the equity market. We took advantage of the narrow breadth in the second quarter to increase our exposure to the consumer discretionary sector with two purchases that further enhance portfolio diversification and should help support consistent performance through a full cycle.
Starbucks Corporation (NASDAQ:SBUX) is the leading provider of specialty coffee beverages, operating close to 19,000 global stores primarily in North America, China and Japan and 37,000 licensed partner locations. We view Starbucks as a quality compounder with strong free cash flow, operating in a segment and in dayparts that are very much routine-based and habitual, balancing the business’s exposure to discretionary spending. Additionally, Starbucks is still in the early stages of its reinvention plan to help accelerate revenue growth over the next several years on the back of better same store sales and unit growth. Coupled with the benefits of margin expansion, we believe the company can drive double-digit EPS growth at scale.”
1. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 70
McDonald’s Corporation (NYSE:MCD) sells coffee at its outlets throughout the world. The company’s management last month talked about its coffee business in the latest earnings call:
“This approach of smaller, more affordable bundles featuring our core menu favorites was first highlighted earlier this year in Germany and the U.K. with the launch of new permanent value offerings and has since been adapted locally in other markets. In Canada, a highly competitive breakfast market, the team offered customers a more affordable option with the McMuffin and hot coffee pairing. By simply featuring our core products, at a compelling price point during a critical day part, we drove market share gains in both breakfast and coffee, demonstrating how providing customers, what they want at great value always resonates. The D123 Everyday Value Menu in the U.S. takes a similar approach to affordable bundles with nationally promoted products at locally relevant price points.”
McDonald’s Corporation (NYSE:MCD) also said:
“Maybe one I would just call out is in Canada, where the team there put a morning offer in place, which was a McMuffin and coffee pairing breakfast in Canada, is a pretty important daypart. Coffee is a pretty important part of that daypart. And so, I think our markets are going to continue to front footed and proactively make sure that we’re adjusting value. So it’s relevant to what our consumers are looking for as the context continues to evolve. And value, as Chris talked about, is a strategic part of our fundamental business model, but we are obviously going to continue to listen to our customers and make sure we’re delivering what they need and what they expect from us.”
Read the full earnings call transcript here.
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