The food and beverage industry has drawn my attention to some pretty good players this week.
In February, Starbucks Corporation (NASDAQ:SBUX)-owned Seattle’s Best Coffee came together with Inventure Foods, Inc. (NASDAQ:SNAK) to announce the launch of Seattle’s Best Coffee® Frozen Coffee Blends, the first frozen coffee beverage that can be enjoyed at home.
Grow much?
Talking about Inventure, the food and beverage company recently announced financial results for the fourth quarter and year ending Dec. 29, 2012. The company announced a record annual net revenue of $185.2 million. Compared to the same quarter the previous year and adjusted for comparability, the company’s net revenues increased by approximately 8.5% in the fourth quarter of 2012.
Reportedly, the demand for blended coffee is on the rise. In 2012, the market for blended coffee witnessed sales worth $4.3 billion. Thus, the deal with Seattle’s Best Coffee should generate considerable further revenue for the Arizona-based multi-brand company.
Rise up!
Another coffee company that looks promising is Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR).
The company is best known for K-Cups, in the single cup coffee segment, and Keurig brewers, which makes it one of the leaders in the brewer sector. According to the earnings report for the first quarter of 2013, brewers account for nearly 28% of the company’s revenue, worth $377 million. However, the company faces competition from Verismo, the premium coffee machine launched by Starbucks Corporation (NASDAQ:SBUX) in 2012. Although the initial response to Verismo hasn’t been impressive, mainly owing to high prices, it has the potential to gain traction in the single cup coffee segment. Does that mean that Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) needs to worry?
Looks like it does not. Given the lows experienced by the company’s shares in fiscal 2012, the company has shown considerable improvement and has a strong potential to grow in future quarters. The company has plans of improving and upgrading its Keurig brewing systems to attract more customers and earnings growth. In the previous two quarters, the company raised its earnings guidance for 2013. Revenue growth and growing profit margins make it an attractive buy.
Foolish verdict
Starbucks expects to expand internationally, especially in the China-Asia Pacific region, a region that has seen sales growth of more than 65% in the last five years. This should mean further profits for the coffee giant, which has a P/E of 29.55. Further, the company is known for its excellent customer loyalty and innovations, which are sure to drive future sales. Throw in a dividend yield of 1.60% and you have a winner!
As for Inventure, with a P/E of 19.02, the stock looks promising. As compared to this time last year, the stock is up by nearly 76.3%. The deal with Starbucks will only add to its upside potential. Green Mountain investors need not worry either. Despite a tough 2012, the company has managed to bounce back and looks like it’s here to stay.
The article It’s Time to Wake Up and Smell The Beans! originally appeared on Fool.com and is written by Sonam Chamaria.
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