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Coffee Holdings Company Inc Makes Big Move Into Protein Drink Market

Mark Krieger profile picture
Mark Krieger's Blog
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  • third quarter results could be out as early as Sept 13th and as late as Sept 15th.
  • shares have fallen 25% from their recent highs.
  • just announced a $2.50 million investment in OWYD "Only What You need"
  • buy when there is blood in the streets.
  • exploiting fear, is the key.

protein drink(JVA) has been decimated lately. The hate selling seems relentless and as I type, the stock is already down 10% on a very brisk volume of 170,000 shares. Since its June high of $6.19, JVA has fallen over 25%, despite the company successful launch of its CBD product division. Mr. Market has literally taken the shares behind the woodshed and beat them beyond recognition. The question is why? Why the ass whooping? Is it justified or is the market simply too fickle and hard on this little coffee purveyor? I choose the latter. I figure it is good to buy when there is blood in the streets. A capitulation is near, presenting a tremendous time to exploit the current "fear" associated with this ticker symbol. How else are you able to buy low? the name of the game in this business, is merchandising-buying wholesale and selling retail.

The company announced it is entering the "ready to drink" protein market with its $2.50 million investment in OWYD (a plant based protein drink producer, available at over 2000 locations). JVA plans to work with OWYN to explore potential benefits and synergies between the two companies. I don't like the purchase. I think the money could of been spent much better, on buying the company's own shares. This would of accomplished three things: (1) creating confidence  (2) reducing share count and increasing earnings per share (3) building demand for the shares, thus raising the stock price.

Third quarter earnings are expected out no later than Sept 15th. Expectations  are  low and should be a cinch to surpass. Sales on a sequential basis are anticipated to drop 4% from $14.50 million to $14 million, while earnings are forecasted to drop 33% from 6 cents to 4 cents. I think we will see a beat on both metrics. Look for sales to come in at $14.80 million and earnings to tally 7 cents. Looking back at last year's third quarter for comparison purposes, although sales will come in roughly 15% lower (from $17.34 million), those diminished sales will produce the same earnings of 7 cents, thanks to a greater profit margin and lower SG&A costs.

Summary: the company has a clean balance sheet, a national presence and a product that is in extreme demand. It is time to back up the truck. You will be glad you did.

Analyst's Disclosure: I/we have a beneficial long position in the shares of JVA either through stock ownership, options, or other derivatives.

I own a large position

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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