Human beings drink a whole lot of coffee. In the United States alone, consumption is around 4.2kg of the bean per person, per year. That means big business for companies like Starbucks Corporation (NASDAQ:SBUX) and Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) which get this commodity into the hands of consumers.
The Keurig
One of the biggest appeals of Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is their Keurig machine. The little coffee maker that sits on kitchen counter tops takes a single serve coffee pack and produces just the right amount of coffee from it.
These machines took off like wildfire in 2010, and the company has capitalized on being the only seller of the K-Cups that this machine takes.
Sales encompassing the entire Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) business were just $490 million in 2008. They have since grown to $3.86 billion as of the close of 2012. Net income has been following along the same path growing from a 2008 value of $21.67 million all the way up to $362 million in 2012.
Analysts have it rated as a ‘buy’. Eight of the fourteen analysts believe it to be a ‘strong buy’, and the rest are spread among the other categories. One analyst is going against the grain giving the stock a ‘strong sell’ rating.
Looking at estimated growth for Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) from those above analysts, we can see that they expect five-year growth to be about 20%. In 2013 alone, analysts have settled on a median growth number right around 31%. For a little bit of comparison, the S&P 500 as a whole has a five-year growth rate of 9.9%, so Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is right about double.
The Behemoth
Starbucks Corporation (NASDAQ:SBUX) is the behemoth of the coffee industry. The company sells in excess of $13 billion of coffee every year to consumers across the United States, and around the world.
I’m sure that a majority of people out there would consider Starbucks Corporation (NASDAQ:SBUX) a much more solid brand than Green Mountain, simply because of the company’s worldwide reach. Well, I think I’d have to agree.
Starbucks Corporation (NASDAQ:SBUX) brings a lot of growth to the table. Revenues have been growing consistently over the last five years at a rate of around 6% per year. That’s pretty steady.
When it comes to future growth, analysts are likely throwing Starbucks Corporation (NASDAQ:SBUX)’s Keurig competitor, Verismo, into the mix. In 2013, analysts are calling for 22% growth. Over the next five years, they’ve forecast 18.2% growth. When you’re talking about a coffee company the size of Starbucks, I don’t think you could be disappointed with that.
Oh, Canada!
I’m going to assume there aren’t many people in the United States, particularly in the southern states that have heard of Tim Hortons Inc. (USA) (NYSE:THI). With more than 4,500 locations, predominantly in Canada, this company is a force in the coffee world.
Sales at Timmy’s have been growing every single year, even throughout that recession we had, for the last decade. Last year the company managed to do just over $3 billion in sales.
If those analysts covering the stock have some sort of accuracy with their predictions then we could be seeing this company grow by 10% per year over the next two years.
Tim Hortons Inc. (USA) (NYSE:THI) does not have some sort of Keurig machine out there in the world, sorry guys. What they do have is market control up in Canada. When it comes to expansion, they’re slowly working their way down from the Canadian border. The company has stores in Ohio, and NY. Outside of North America, the company has 19 stores in the United Arab Emirates, and one in Oman.
Investor Takeaway
Starbucks is a great investment. When it comes to the growth that analysts have projected for this company, and the potential of the Verismo to sell quite a few units, it make me want to own the stock.
Green Mountain Coffee Roasters is another stock that analysts believe will have exceptional growth over the next five years. While they don’t have the retail positioning that Starbucks has, they do have the Keurigs out there in lots of homes. Those Keurigs need to be refilled, and that’s where Green Mountain will find a nice “perpetuity” coming their way.
Tim Hortons is not wowing analysts as much as the other two, but this company will no doubt appeal to investors who want that international exposure. With segments now in the middle east, Tim Hortons could really broaden your portfolios horizon.
The article Wake up, Grab Some Coffee, and Invest in It originally appeared on Fool.com and is written by Ash Anderson.
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