The J.M. Smucker Company (SJM), Starbucks Corporation (SBUX): A More Diverse and Stable Coffee Play

As an investment, Starbucks’ shares may be a little on the pricier side right now, at 32.2 times TTM earnings. I’m not sure that the forward growth rate of around 15% justifies such a high valuation, and Starbucks Corporation (NASDAQ:SBUX)’s market may be getting a little bit saturated at this point. I have to think that its growth will start slowing down a bit in the coming years.

McCormick & Company, Incorporated (NYSE:MKC) is a play on the food business, a leader in spices, seasonings, and flavorings. About 60% of the company’s sales go to retail customers, with the other 40% go to foodservice customers such as restaurants. At around 24.1 times TTM earnings, McCormick may be a little expensive, with just 8% annual earnings growth expected over the next few years.

Buy, Sell, or Hold?

With exposure to the rapidly growing single-serve coffee industry as well as to the stable packaged food business, The J.M. Smucker Company (NYSE:SJM) just may be an ideal compromise between the two. I would like to see shares pull back a bit, as I would with most stocks right now. But even at the current price levels, I believe Smucker has a lot to offer.

The article A More Diverse and Stable Coffee Play originally appeared on and is written by Matthew Frankel.

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