Consequently, I expect coffee shares to regain the losses they incurred in 2008.
Individual company outlook
Starbucks reaffirmed its fiscal 2010 earnings per share (EPS) guidance to be in the range of $1.19-$1.22, which equates to a growth rate of approximately 50% on a non-GAAP basis. The guidance range includes approximately $0.04 per share and will benefit from a 53rd week in this fiscal year, and excludes an estimated $0.03 in restructuring charges, mostly related this year to international store closings. According to Reuters Estimates, analysts are expecting the company to report EPS of $1.22 for fiscal 2010. As on date, Starbucks one year target is at $30, which is pretty much reasonable. Currently, the stock is at resistance 27.88 ± 0.42. No resistance above but there is support below, -3.7% at 26.95 ± 0.4. As on date, Starbucks is overbought odds favor short trades. Watch for possible breakout above $28.31, no resistance in area just above.
Caribou Coffee Company - Bearish
CBOU, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were -0.29, -0.47, -1.59, -0.84, and 0.26, a sign of inconsistency. Several ratios suggest CBOU is over valued. So, I am not favorable on this stock. If it reports July quarter eps below $0.06, then I guess it is time to exit.
Green Mountain Coffee Roasters Inc. - Bullish
In the last four quarters, the company outperformed analysts consensus estimates. GMCR posted $0.27 vs. $0.10 Q1 non-GAAP EPS on 77% sales rise. Analysts were looking for EPS of $0.16. It raised FY2010 EPS guidance to $1.95-$2.05 from $1.85-$1.95, excluding any 1X acquisition-related transaction expenses for pending DIEDRICH acquisition. As on date, one year target is at $35. I think this is reasonable on several methodologies. For instance, the stock's intrinsic worth is more than $77 and its 52 week range is between $17.22 and $76.4. So, I am bullish on the stock.
I am bearish on Peet's Coffee & Tea, Inc. and Farmer Brothers Co. I am bullish on Coffee Holding Co., Inc.