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September 23, 2008 Stock Pick: Caribou Coffee Company (CBOU)

Stock Price: $2.76

Caribou Coffee Company, Inc. operates gourmet coffeehouses offering gourmet coffee and espresso-based beverages as well as specialty teas, baked goods, whole bean coffee, branded merchandise and related products. The company also sells gourmet whole bean and ground coffee to grocery stores, mass merchandisers and other customers.

Caribou Coffee is an attractive up and coming coffee company with 484 coffeehouses at the end of 2007 including 52 franchised coffeehouses. CBOU's coffeehouses are located in 16 states, Washington, DC. and International markets. CBOU has a strong start in the coffee business and has a lot of room to expand.

CBOU has grown revenue the last three years from $197.9 million in 2005 to $236.2 million in 2006 to $256.8 million in 2007. CBOU has been cash flow positive in three of the last four quarters.

CBOU is trading just above its book value of $2.62. Insiders have been purchasing CBOU heavily this month and last month.

We believe CBOU's market cap of around $53 million is low for this type of attractive coffee operation with solid current operations and plenty of growth potential.

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