Declining Commodity Prices Bring a Former Holding Back to the Bullpen
Laying the groundwork for a potential second-half 2026 shift in market sentiment for the consumer.
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Following on my comment Wednesday morning about the market being technically overbought, its emphasis, if not overemphasis on the AI basket, and potentially overlooked opportunities, let’s take a look at some interesting developments in key commodities.
What we see in the charts above is a clear decline in the cost of coffee, dairy, sugar and cocoa prices, a basket of ingredients for companies such as Starbucks (SBUX), Hershey (HSY), Black Rock Coffee (BRCB), and former Pro Portfolio holding, Dutch Bros (BROS).
While transportation costs have risen and are likely to remain a headwind for some time even after a formal U.S.-Iran peace agreement is announced, the declines in those commodities paired with pricing action taken could translate into better-than-expected margins in the coming quarters. If consumer inflation pressures, like those for food and gas prices, improve in the second half of 2026, market sentiment is likely to return for companies tied to disposable consumer spending.
With that in mind, we will add Dutch Bros back to the Portfolio’s Bullpen, where it joins Hershey as well as recently added Boeing (BA), and Starfighters Space (FJET).
Why Dutch Bros and not Starbucks?
The Dutch Bros story remains much more tied to geographic expansion that the one for Starbucks, and Dutch’s expected EPS growth rate over the next few years is 50% higher than that for Starbucks.
At the time of publication, TheStreet Pro Portfolio had no positions in any securities mentioned.
