Sure, you might feel like coffee saves your life on Monday mornings, but new studies show that it might actually be true over the longer term.
Not necessarily in the short term, but long term effects include prevention of dementia, decreased risk of diabetes, and association with all-cause mortality.
A recent study supports coffee’s inverse association with total and cause-specific mortality. Whether it is causal or associative couldn’t be determined, and there was a difficulty in understanding the raw data presented. It was found that coffee drinkers were more likely to die, but they were also more likely to smoke. After accounting for the variable, it was found that coffee was associated with decreased all-cause mortality. Take note: The test subjects showed that the effect was dependent on the consumption of around five cups per day. (As a Seattleite, I love coffee and drink a lot of it, but even 5 cups is quite a bit per day.)
The study doesn’t do much in the face of historical data, though. There are countless studies claiming both positive and negative effects of coffee consumption, including heart disease, hypertension, and stained teeth, but its benefits are still easily supported.
Business Section: Investing Ideas
If coffee is considered healthier than it was before, what does that mean for coffee companies? It really depends on how strongly the alleged benefits are advertised. I’ve already seen Seattle’s local coffee shops advertising the health benefits of their organic coffee beans, so the larger companies only have to utilize similar marketing campaigns to reap the rewards.
That brings up the argument of which coffee beans are healthier. The claims vary by producer and seller, but my experience tells me that the health benefits of organically grown beans are advertised much more than the alternatives.
So how can this fit into your portfolio?
Below is a list of a few of the big names in the coffee scene. How do you think they will leverage the news?
Use this list as a starting-off point for your own analysis. List sorted by market cap.
Compare changes in average analyst ratings for the companies mentioned below:
2. Starbucks Corporation (SBUX, Earnings, Analysts, Financials): Operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. Market cap at $38.24B, most recent closing price at $50.60.
5. Peet’s Coffee & Tea, Inc. (PEET, Earnings, Analysts, Financials): Operates as a specialty coffee roaster and marketer of fresh roasted whole bean coffee and tea in the United States. Market cap at $993.75M, most recent closing price at $73.05.
Written by Danny Guttridge, avid coffee drinker.
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Dig Deeper: Access Company Snapshots, Charts, Filings
- McDonald’s Corp. (MCD, Chart, Download SEC Filings)
- Starbucks Corporation (SBUX, Chart, Download SEC Filings)
- Dunkin’ Brands Group, Inc. (DNKN, Chart, Download SEC Filings)
- Green Mountain Coffee Roasters Inc. (GMCR, Chart, Download SEC Filings)
- Peet’s Coffee & Tea, Inc. (PEET, Chart, Download SEC Filings)
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