The Best Coffee Stocks for a Taste of Excellence in your Portfolio

best coffee stocks

The best coffee stocks will help your portfolio perk up and face the future with vigor.

Coffee. That sweet nectar that makes life possible. That joyous beverage that offers us a renewed outlook on our days. Those tasting notes of caramel and chocolate and vanilla and…well, you get the idea. If you’re a coffee connoisseur, you recognize this. If not? Fortunately, you don’t have to be a coffee nerd to enjoy the best coffee stocks. 

Coffee isn’t just a beverage; it’s also a commodity. More specifically, it’s a fruit that grows on trees in higher elevations close to the equator (between the Tropic of Cancer and the Tropic of Capricorn). The abbreviated version of the coffee path is from a farm where it’s grown, to a processor where it gets washed and dried, to auction, then exported through a distributor, to a roaster, then to wholesale or retail. 

In other words, there are a lot of points where we might find the best coffee stocks. 

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There’s no getting away from coffee stocks 

There are a few different ways to approach an investment in coffee. Because it’s a globally popular beverage, you have the option of both international and domestic stocks. You can look at it as a retail investment, as might be the case with coffee shops, or as a consumer staple that you can buy at the grocery store. And there are also larger brands that include coffee as part of their overall business. 

For example, if you want to invest in Folgers coffee, you’ll need to make an investment in the consumer staples giant JM Smucker Co (SJM). Or if you’d like to put your money into Maxwell House, that requires an investment in the Kraft Heinz Co (KHC)

An investment in Coca-Cola (KO) gives you exposure to the global beverage industry through ready-to-drink coffees and teas. Additionally, Coca-Cola recently acquired Costa for ~$5 billion, which gave it even greater exposure to coffee. Costa is a London-based coffee chain that has operations in more than 30 countries. 

And don’t forget there is coffee equipment, as well. In fact, if you consume any media at all, you’ve probably seen ads for Keurig coffee makers. Keurig coffee makers, from Keurig Dr Pepper (KDP), have surged in popularity in recent years since they allow consumers to sample their favorite coffee shop beverages (including Starbucks (SBUX), Dunkin Donuts (DNKN), and Caribou coffees) in the form of single-serve K-Cup pods

The best coffee stocks for both conservative and adventurous investors

When most people today think of caffeine, they think of Starbucks. With top-line sales in the tens of billions, Starbucks is the world’s largest coffee retail chain with over 30,000 stores globally and a presence in virtually every city of size in the U.S.

Starbucks’ management is confident it has the financial strength to make investments for the long term while navigating short-term challenges. And it’s worth noting that the company has steadily raised its dividends, while SBUX stock has tended to outperform the S&P during past bull markets

There’s a good possibility that you already own some stock in Starbucks through a 401k or an index ETF. If not, though, this blue chip stock offers a certain amount of safety that can bring stability and long-term profits to a portfolio.

New on the scene is Laird Superfood (LSF). The company offers powdered coffee creamers, instant coffees, coffee beans, plant-based protein powders, snacks, and other supplements. It has been rolling out new products quickly, both before and after its IPO on September 3, 2020. LSF jumped 85% from its IPO price of 22 on its first day of trading.

LSF is not a profitable business at the moment, but with a market cap of just under $500 million, this is the type of company that can fly under the radar for a while, and do quite well as it gains space on grocery and specialty store shelves. It could very well have a market cap of a couple billion dollars in a few years. 

Of course, you should always do your homework and ensure an investment fits your portfolio before you jump in. Popularity and profitability don’t always go hand in hand. 

In your opinion, what are some of the best coffee stocks? Do you have any recommendations you would share in the comments?

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