Dunkin Brands Group Inc (NASDAQ:DNKN) looks to continue growth with technology and restaurant expansion. Last quarter, Dunkin’ completed 113 remodels. The company has planned to open 330 to 360 more Dunkin’ Donuts in the U.S. and 400 to 500 overseas. It also wants to expand more bakeries to offer items other than donuts. These items will include breakfast sandwiches and other baked goods. These items have available add-ons such as coffee or espresso shots.
Dunkin Brands Group Inc (NASDAQ:DNKN) has also grown its mobile application. This new app allows you to pay for purchases, locate stores, and give gift cards from your phone. Now with 2.1 million users, the Dunkin’ mobile app has steadily continued gaining popularity.
For the rest of the year, Dunkin Brands Group Inc (NASDAQ:DNKN) expects to have 6% to 8% revenue growth that will yield earnings per share of $1.50 for 2013. This will be an increase from its current earnings per share of $0.94 which gives the company a forward P/E ratio of 22.67. Dunkin Brands Group Inc (NASDAQ:DNKN) looks like a safe stock that could give you returns over time. But when it comes to caffeine, there are better investments to be made.
Mixing a monster
Energy drinks are the rebellious teens of the caffeinated world. Fighting to be number one in the energy drink market is the Monster Beverage Corp (NASDAQ:MNST). Monster produces a line of energy beverages like Monster Energy, Java Monster, and Muscle Monster. The company has been growing its brand around the world with recent product launches in Romania and Albania. It is also gaining momentum in the European, Brazilian, Korean, and South African markets. First quarter net sales were recently up 6.5%, which boosted market share a point to 32.7%. Monster Beverage Corp (NASDAQ:MNST) will continue global expansion by launching in Eastern Europe and India in the coming year. Monster has the second largest market share behind Red Bull, which has 35.9% of the energy drink market. But with Monster’s growth overseas, it looks like it has the potential to overtake Red Bull.
It’s not all good news for Monster Beverage Corp (NASDAQ:MNST). The company is being sued by San Francisco City Attorney Dennis Herrera for pitching highly caffeinated drinks to minors as young as 6 years old. A 16 ounce can of Monster has 160 milligrams of caffeine, which is half the amount of caffeine in a Starbucks coffee of the same size. Despite this fact, Herrera seems determined to make the energy drink company pay. While the FDA has approved Monster energy drinks, it is getting a third party to research the effects and risks of energy drinks on teens and children. This study, set to be released at the end of 2013, will have a major impact on the energy drink market. If the study finds that there are no major negative side effects of drinking energy drinks then Monster will see sunny skies ahead. If the results are negative then Monster Beverage Corp (NASDAQ:MNST) would potentially have to reformulate its products. I would hold off on buying Monster until these results have been released.
Conclusion
The world needs its caffeine and Starbucks Corporation (NASDAQ:SBUX), Dunkin’, and Monster are more than willing to supply it. Of these three companies, I like Starbucks and Monster because of their growth strategies. Even though they are solid businesses, they are currently dealing with problems. When Starbucks gets past its situation in China it should continue its growth. Monster will require a little more waiting. The company’s legal battle needs to pass and the energy drink research needs to be released before I’d call it a buy.
Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Monster Beverage and Starbucks. The Motley Fool owns shares of Monster Beverage and Starbucks.
The article Caffeine Companies: Three Stocks to Wake You Up originally appeared on Fool.com.
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