Which Coffee Stock is a Better Buy? -Breaking
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© Reuters. Starbucks vs. Keurig Dr Pepper Coffee: Which Coffee Stock Is a Better Investment?A reduced supply of coffee from Vietnam and Brazil—two of the world’s major coffee exporters—owing to bad weather and COVID-19 lockdowns, combined with rising fertilizer prices and global supply chain disruptions, has caused coffee prices to surge lately. But, technology advancements in coffee processing should help to increase demand for this beverage. We think that prominent coffee stocks Starbucks (SBUX), Keurig Dr Pepper and NASDAQ (NASDAQ) will benefit. What stock do you think is the best buy? Find out more. Keurig Dr Pepper Inc. and Starbucks Corporation are both prominent names in the coffee market. SBUX, located in Seattle, Wash. is a multi-national chain of coffeehouses that retails, roasts and offers its specialty coffees and bottled coffees. It also makes ice creams. The company licenses trademarks via licensed shops and foodservice accounts. KDP is located in Plano. Tex. produces and distributes specialty coffee and soft drinks to consumers, retailers and bottlers.
The coffee market has seen a seven-year increase in prices due to the COVID-19 panic lockdown in Vietnam, rare drought and freezing temperatures worldwide, which have all resulted in coffee crop destruction, increased fertilizer costs, supply disruptions, and coffee production being halted. Although there are many efforts to alleviate the shortage of supply, automated brewery software, solutions and new flavours of coffee, as well as better packaging, should allow companies to offset input costs while still making money from rising demand. Investor optimism in this space is evident in the iPath Series B Bloomberg Coffee Subindex Total Return ETN’s (JO) 15.1% returns over the past three months, versus SPDR S&P 500 Trust ETF’s (SPY) 5% gains. Global coffee markets are expected to expand at 2.8% CAGR from 2021-2025. SBUX, KDP and both should reap the benefits.
SBUX’s price has risen 0.7%, but KDP is up 1.5%. KDP is a clear winner with 22.8% gains versus SBUX’s 19.5% returns in terms of their past year’s performance. What stock do you think is the best? Let’s find out.
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