Starbucks Corporation (SBUX), McDonald’s Corporation (MCD) – Coffee: America’s Favorite Addiction

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Staying home

As America continues to recover from the recession, Keurig K-Cup coffemakers have given consumers the ability to brew Starbucks beverages at home. As proof that home-brewed coffee is hotter than ever, Zacks recently reaffirmed Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) “outperform” rating. In its most recent quarter, the company reported $1 billion in earnings, with revenue up 13.5% from 2012.

As the owner of Keurig brewing machines, Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) benefits from agreements with Starbucks, where it helps package and distribute the retailers’ coffee in a K-Cup format. In return, the chain sells Keurig coffeemakers in their stores. The company recently raised its earnings projection for the fiscal year, citing plans to bring even more big brands to its K-Cup portion packs. With a consensus rating of “Buy,” the company’s average target price is $73.25.

Foolish final word

The partnership between Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) and Starbucks is symbolic of consumers’ coffee consumption habits. Even those consumers who brew coffee at home make at least the occasional trip through the McDonald’s Corporation (NYSE:MCD) or Starbucks drive-thru. Still, with partnerships in place, Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) looks to be a promising company to satisfy consumer caffeine demand over the long term. With Starbucks continuing to be the name in coffee consumption, McDonald’s Corporation (NYSE:MCD) will have to make serious changes to compete.

The article Coffee: America’s Favorite Addiction originally appeared on Fool.com and is written by Stephanie Faris.

Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters, McDonald’s, and Starbucks. The Motley Fool owns shares of McDonald’s and Starbucks. Stephanie 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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