J.C. Penney's Revamp Could Boost This Coffee Shop Chain

| About: Caribou Coffee (CBOU)

There was an interesting tidbit in the news the other day about one of my favorite coffee shops (I like it mainly for its Hoof Mints). Caribou Coffee (NASDAQ:CBOU) was used in J.C. Penney's (NYSE:JCP) new store-within-a-store concept. There were some rumors in the Minneapolis papers that the company might be in line to put the coffee shops within all 700 J.C. Penney stores. This would be a game changer for Caribou Coffee given it currently has less than 600 storefronts. The stock might be a good speculative play on the possibility.

According to the business description from Yahoo Finance, "Caribou Coffee Company owns and operates coffeehouses. The company operates in three segments: Retail, Commercial, and Franchise."

Here are six additional reasons why Caribou Coffee could have upside from $13.50 a share:

  1. The seven analysts who follow the stock have a $16 a share price target on the stock.
  2. The company has easily beat analysts' earnings estimates for six straight quarters. The average beat over consensus during that time frame has been over 25%.
  3. Caribou Coffee has over $30 million in net cash on its balance sheet (approximately 15% of its current market capitalization).
  4. An insider made the first new purchase in late August 2012.
  5. The company's margins should be positively impacted by the recent fall in coffee prices.
  6. The stock has recently bounced off a long-term technical support level. It has crossed its 100-day moving average and is poised to crossed its 200-day moving average (see chart).

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Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CBOU over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.