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Friday, July 29, 2011

Dunkin’ Brands, Teavana Get Coffee-Stock Jolt

July 29 (Bloomberg) -- Rallies in Dunkin’ Brands Inc. and Teavana Holdings Inc. after initial public offerings this week reflected growing investor interest in providers of specialty coffees and teas.

The chart illustrates the trend with an index consisting of Starbucks Corp., Green Mountain Coffee Roasters
Inc. and a trio of smaller companies: Peet’s Coffee & Tea Inc., Caribou Coffee Co. and Coffee Holding Co.
The coffee-stock gauge soared 95 percent this year through yesterday, trouncing a 3.4 percent gain in the Standard & Poor’s 500 Index.

Starbucks, the group’s worst performer, rose 24 percent in advance of yesterday’s earnings report.
Dunkin’ Brands, the operator of Dunkin’ Donuts coffee shops, climbed 47 percent on the first day of trading July 27 after the Canton, Massachusetts-based company’s IPO. Teavana, a seller of loose-leaf teas that’s based in Atlanta, surged 64 percent the next day in its stock-market debut.

“Teavana is riding in the wake of what happened with Dunkin’ Donuts, and the parallels are coming out,” David Menlow, president of in Millburn, New Jersey, said in a telephone interview yesterday. His firm has “buy” ratings on both companies. He doesn’t own shares of either.

The industry index assigned one-third weights to Starbucks and to Green Mountain, based on share prices at the end of last year. They had market values as of yesterday of $30 billion and $15.4 billion, respectively. Peet’s, Caribou Coffee and Coffee Holding collectively accounted for the other one-third of the
gauge, and each was weighted by its value as of Dec. 31.

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