NEW YORK, NY--(Marketwire -08/27/12)- After an impressive start to the year coffee stocks have cooled off significantly as Europe's current economic crisis have seen demand drop across the region. But global demand may be picking up as recent data from the International Coffee Organization (ICO) showed that global coffee shipments have increased 2 percent in the April-June quarter, after declining in the two previous quarters. Five Star Equities examines the outlook for companies in the Coffee Industry and provides equity research on Starbucks Corporation (SBUX) and Green Mountain Coffee Roasters Inc. (GMCR).
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Coffee prices have dropped significantly in 2012. According to the ICO from July 2011 to July 2012 the average monthly price for a pound of coffee has fallen by 24 percent. Coffee companies haven't immediately benefited from lower prices, but will look to in 2013.
"What they typically do is they buy coffee on a six-to-nine-month-out forward-rolling basis," says Will Slabaugh, research analyst at Stephens Research. "When you see coffee prices dropping now, what you're preparing for is a benefit into next year and then likely into 2014 as well, if prices can stay low."
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Starbucks earlier this month signed a $25 million partnership with Square Inc., a provider of credit card readers for mobile devices, to their credit and debit transactions. By the fall customers will be able to pay for their purchases by using Square's mobile apps. "Both Starbucks and Square take a similar approach when building products and running our businesses, and together we can bring the best possible payment experience to Starbucks customers," said Starbucks Chairman, President and CEO Howard Schultz.
Green Mountain Coffee Roasters, makers of the Keurig Single Cup Brewing System, shares rose over 25 percent after reporting strong second quarter results earlier this month. Shares of the company saw their biggest gain in over a year after reporting second quarter profit surged 30 percent. Net Income grew to $73.3 million from $56.3 million a year earlier.
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- Green Mountain Coffee Roasters
- Starbucks Corporation
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