3 Coffee Stocks to Buy

Submitted by Stockmaster2 on Thu, 02/02/2012 - 18:54

Tags:

Shares of Green Mountain Coffee (GMCR) blew out estimates today - here are 3 Coffee Stocks that are not too late to get into.

It's official, Coffee is unstoppable. Even during a recession, the public has shown that they will not give up their Java. Now let's get to the stocks: Peet's Coffee (PEET), Coffee Holding (JVA) and Caribou Coffee (CBOU).

Peet's Coffee (PEET) has had a 7.20% increase in sales over the last twelve months and earnings per share of $1.3. EPS has increased at an annual compound growth rate of 18.64% over the last five years, making the growth rate of the stock very attractive. And who knows, maybe a company looking to expand, like Dunkin Brands, could buyout the company. For a high priced stock, Peet's market cap is pretty low at just under $1b.

Looking at the chart, Peet's has hit multiple tops right around the $65.00 range. In spite of that, the channel that it's trading in is getting narrower, so this should act as compression which we think will eventually break out to the upside. If it does break out, there's a lot of open air up there for it to run, think $75 - $80.

Coffee Holding (JVA) reported a horrible quarter last week, missing consensus estimates of $.23 with a surprise loss of $-.30, due to some mishaps in their coffee hedging program. A sure way to tell if a stock has hit bottom is if bad news comes out and investors barely bat an eye. There simply aren't any sellers of the stock left. I think JVA hit the bottom last week and it will go up from here - after that much of a surprise in earnings, you'd think shares would plummet to around $5, but the fact is shares went from $9.35 down to $8.69 after earnings. This week it's already back to $9.10.

The chart shows a nice base forming for the past 3 months. I'm looking for a breakout to $12 - $15 range, but keep a tight leash on this one due to volatility.

And lastly, Caribou Coffee (CBOU) has already had a major breakout in January, moving from $14 to $17. But just because it's trading near a 52 week high doesn't mean you should overlook it. Caribou Coffee is the second largest company-owned coffee house franchise in the U.S. behind Starbucks.