Ten Peaks Coffee Co (TPK.TO)

This has just broken back above its resistance line on the 50 day moving average. The momentum is negative, but is starting to improve. RSI is a 65, and if it goes 5 points above that, that gets into overbought territory.

There was tax loss selling. There are a few things happening in the sector that are causing delays in some orders, but they are resuming quite rapidly now. He is accumulating shares and is at 7% of the company. They have very high barriers to entry, selling chemical free organic coffee. They are trying to penetrate further into McDonald’s USA. Insiders are buying now. It is the time to buy.

A coffee bean decaffeinater. The recent quarter wasn’t that strong. They saw regional market volumes dropping, about 20% this quarter, which have dropped in past quarters as well. Their national accounts, such as McDonald’s and Tim Hortons volumes, are actually increasing. Coffee prices are rising currently, so a lot of buyers are deferring coffee purchases. In theory, it should all work itself through. He thinks the real focus is out to 2018. They are building a new processing plant to help improve capacity. You have 6 months before a whole lot is going to happen. It may be a good tax-loss selling candidate, and then returning to it in 6 months.

Organic-based coffee. Their real advantage is the relationship with customers. They are in McDonald’s and Tim Hortons, but haven’t penetrated those customers to the full extent. There was an investigation into one of their competitors, which is always good. Had a big run, but has not checked back and looks very attractive.

(A Top Pick May 31/16. Down 8.89%.) You have to remember that this is a very small company, so orders are a little lumpy. Last quarter was lumpy, but thinks that next quarter you get a very good quarter. Going forward, he thinks coffee prices do very well.

This is a name that he really wants to like. However, there are a few things holding him back. One is customer buying power. They have some national accounts that are very large which can swing the results on any given quarter based on the volumes they need. The other issue is that it sort of serves as a subset of a subset of a market. On the positive side, a Mexican competitor just had their FDA Green certification stripped. 2018 is what you have to look out to. They are building a new production facility in the BC area. It is okay to own, but you are just going to have to tuck it away until the new plant is built and then wait 6 months.

(Top Pick Aug 26/15, Down 8.46%) New accounting practices made results more volatile compared with the year before. Now there is the potential to get more of the MCD-N business from the US. He has been accumulating. Markets are improving. Some of the volume growth has disappointed the market in the last 6 months.

When he sees what people are paying for coffee, it astounds him. People like chemical free products and they will pay more for it. You have to remember that competition in this space is absolutely fierce. It is a small company. Can they keep on competing going forward?

(Market Call Minute.) This is still a buy. It had a big run and is consolidating now. Not a bad company.

Had bought this because of its decaf exposure, which doesn’t have the chemicals in the decaffeination process. It now looks like it is in a “show me” mode, as to whether the investment they were going to do with the proceeds from their issue come to fruition. That is what he is waiting for. Small-cap names can be volatile. Dividend yield of 3%.

The world’s only decaffeinater of coffee that uses a chemical free water process. This is one of his top holdings. Very inexpensive for a company that is a global leader in decaffeinating on an organic and chemical free basis. They are growing tremendously with large accounts, such as Tim Hortons and McDonald’s (MCD-N) and a lot of specialty coffee shops that are going organic and higher quality. There is tremendous growth ahead. Will be building a 2^nd plant in Vancouver this year, in order to double their capacity.

A decaffeinater of coffee, 100% organic. Most decaffeinated coffee is horrible, and is decaffeinated with chemicals. This sells under the trademark Swiss Water in Tim Hortons and is being tested in McDonald’s in the US. They’re really going to see their growth in the “no name” coffee shops. Dividend yield of 3.05%.

Off 35% from its all-time high. The last quarter left investors disappointed. With new accounting rules, you will see a much more consistent margin. They just raised a bunch of money and are operating at capacity. They need a new plant. Huge barriers to entry. 4% dividend.

Canada doesn’t have a lot of great consumer product companies, so when one starts to emerge, people tend to take a closer look at it. This one had a few things, such as foreign exchange and coffee prices, that have been working in their favour. Not sure if results going forward are going to be quite as strong. Given the scarcity of good little companies, he thinks this one is going to continue to do well. Not overly expensive at this time. ROE is not quite what he is looking for, but is still pretty decent. Has been on his radar screen.

Used to be an income trust years ago. Recently did a financing for an acquisition. A little expensive at around 15X EBITDA. Prefers GreenSpace Brands (JTR-X).