PowerTrend Brief: Coffee — A PowerTrend Play That is Paying Double-Digit Percentage Profits

I love my morning coffee. I also happen to love it in the early afternoon and sometimes even late at night.

Perhaps you’re like me because it sure seems that I’m not alone. Coffee demand is booming. I can tell you first hand that situation is the case here in the greater Washington, D.C., area, and the rest of the United States, given the lines I have encountered at Starbucks (SBUX), Dunkin Donuts (DNKN) and in my travels. We’ve also seen McDonald’s (MCD) and Wendy’s (WEN) try to take on Starbucks by overhauling their coffee offerings with tastier blends and even tastier coffee-based drinks.

What you may not know, however, is that coffee demand is exploding outside of the United States. One market that may surprise you is India, a geography that has been better known as a country of tea drinkers. That, however, is changing and it’s an example of my Rise and Fall of the Middle Class PowerTrend. India has a population of 1.2 billion people, but it is the growing middle class that spans 300 to 400 million people in size that is driving consumption and demand for new goods and services. That growth includes coffee.

Avani Saglani Davda, chief executive of Tata Starbucks Ltd., a venture between Starbucks and India’s Tata Global Beverages Ltd., summed it very well — “The size of the Indian economy and the rate of growth of the cafe sector, combined with rising spending power and shift in consumer preferences, present a tremendous opportunity.” Starbucks entered the Indian market last year and already has a number of stores. India, along with China and other emerging markets, is a strategic area of focus for Starbucks and others including Nestle and Mondelez International (MDLZ), which has the number two position in coffee and counts Jacobs Coffee among its billion-dollar brands.

Several months ago when I saw the big profit potential from the combination of falling coffee bean prices and the increasing exposure in India’s growing middle class, as well as in other emerging markets, I recommended that subscribers to my investment newsletter PowerTrend Profits buy Starbucks shares last August at an average price of $45.87. That recommendation paid off handsomely for us — up 27% as of Friday’s closing price of $57.66, including several dividend payments that we’ve received since then. The same is true for Mondelez International (MDLZ), which PowerTrend Profits subscribers picked up this past December. They’ve seen that position grow 9% during the last several weeks.

I’m always keeping my eyes peeled and my ears open for opportunities like that one to drive big gains for my subscribers. While we’re reaping the benefits now of stocks that we bought months ago, I’m busy picking new stocks that will be paying big rewards in the coming months. While some investors only now are trying to catch up on the global coffee trade, PowerTrend Profits subscribers and I are investing in key companies with enviable positions in the connected home, speech recognition and more.

I hope you’ll join us as we build our portfolio and our gains together each week in PowerTrend Profits.

PowerTalk — Job Creation & Small Businesses with Beth Solomon, president & CEO of NADCO

Despite the improving manufacturing economy that we’ve witnessed during the last few months, it’s no secret that job growth has been a disappointment so far in the current economic recovery. No matter how you look at it and irrespective of the metric you choose, it’s been a consistently and persistently weak recovery compared to others. While I admit it looks a little bleak at times, there is reason to think there’s some hope for job creation in this country.

I had the pleasure this week of speaking with Beth Solomon, the president and CEO of the National Association of Development Companies (NADCO). NADCO is the trade association for companies certified by the Small Business Administration to provide financing for small businesses under the SBA 504 program. Beth hammered home the fact that small businesses are the lifeblood of job creation. Despite the industry providing more than $6 billion in capital during 2012 to nearly 10,000 U.S. small businesses, access to capital remains the greatest challenge to small businesses and job creation. In the franchise industry alone, that lack of capital resulted in 94,000 jobs not being created last year.

Beth and I talk about a number of programs and other initiatives that small businesses can tap into right now to get the capital they need and put Americans back to work. That situation makes this Better, Smarter America PowerTrend conversation worth hearing, especially if you are a small business owner.

Upcoming Appearances

• On Tuesday, March 26, I’ll be presenting Three PowerTrends to Profit from in 2013 at eMoneyShow.com. To register, click here.
• You are invited to hear me speak and to meet me on Wednesday, April 10, at 7 p.m., when I discuss “3 Power Trends to Profit From” at a lecture that I will give at New Jersey City University in Jersey City, N.J. The Wall Street Perspectives Lecture Series 2013 event is scheduled for the Harborside Financial Center 4A, 286 Washington Street, in Jersey City. To RSVP, contact Bernard McSherry, an assistant professor of finance, at 201/200-2529 or bmcsherry@njcu.edu. I hope to see you there!

To read my e-letter from last week, please click here. I also invite you to comment about my column in the space provided below.