Peet's Coffee finally starting to perk

Shares of Peet's Coffee (PEET) have shown some recent life, today closing just below $28. This puts the stock within striking range of its 52 week high of $29.17. This is an interesting contrast to coffee rival Starbucks (SBUX), whose shares have been dribbling close to their 52 week low.

Peet's was the originator of the specialty coffee concept in 1966 with the first store opened by founder Alfred Peet. Interestingly, he later played an advisory role in the early days of Starbucks.

Peet's has been delivering steady 20% revenue growth since their IPO in January 2001. In recent quarters, their profit growth has been flat or down on higher costs associated with milk, coffee, and new store openings.

Peet's has kept up the growth in part by opening new retail stores. Another 30 stores are expected to be opened by year end. Peet's has also expanded by distributing their coffee to grocery stores. In fact, this has been their fastest growing sales channel. By year end, they expect to add distribution to at least 1,000 new grocery customers, predominantly in the east.

Peet's has been steadily building their brand and their presence. While their retail store base is predominantly in California, their grocery store distribution channel has brought their coffee to the rest of the nation. When Peet's is ready to expand their retail presence nationally, they will have an established base of customer to build on. While Starbucks has already saturated the country, Peet's is ready to grow and looks poised to do so.

One more thing I would be remiss not to mention. Peet's owns the domain name coffee.com. How cool is that?

Disclosure: I am long PEET