The coffee wars are heating up.
Shares of Luckin Coffee, the $11 billion Chinese coffee giant that went public in May, have been on a monster run in the last six months, rallying 141% and crushing rivals Starbucks, which gained about 3% over the same period, and Dunkin' Brands, which fell 2.5%.
To Gina Sanchez, founder and CEO of investment consulting firm Chantico Global, Luckin's tear may signal that it's taking over Starbucks on an important metric: growth.
"I'm not saying that Starbucks is not a well-run company. I think Starbucks is a great company. It's just that Luckin is at a totally different place in their growth cycle," Sanchez said Thursday on CNBC's "Trading Nation." "They really are going for the gold here and I think that they are going to probably be a stronger growth stock than Starbucks."
Luckin's foray into the public market started on shaky ground, with shares falling by double digits after its first-ever earnings report as a listed company. But its prospects have improved, with the company issuing an upbeat forecast for its fiscal fourth quarter and catching a price-target boost from Keybanc analysts, who predicted on Thursday that the stock will run to $56 a share. It gained 7.5% after the call, closing at $48.53 stock.
"They're earlier in their cycle, they're doing all the right things and they're expanding their product lines," said Sanchez, adding that Luckin's recently announced joint venture with commodity merchant Louis Dreyfus Co. shows the company is firing on all cylinders.
"I would say that the fundamentals actually still favor Luckin, even over Starbucks, which is a very well-established and very well-run company," Sanchez said. "It's impressive to see a company with that kind of discipline this early in their cycle. They got to break even by Q3 2019 at a store level, and that just really paves the road, from a fundamental perspective, for a really interesting long-term buy."
Todd Gordon, founder of TradingAnalysis.com, said in the same interview that it's "hard to argue" with Luckin's triple-digit rally.
"It's hard to do, also, any kind of analysis with such a short history," he added, pointing to Luckin's chart.
"But, obviously, we've broken through resistance, and after we broke through that ceiling, it was off to the races," Gordon said, highlighting the near-$30 level Luckin cracked in late November.
Gordon also emphasized Luckin's outperformance relative to Starbucks, which has been hard at work for several years expanding and refining its China business.
"Clearly, Starbucks is having no luck against Luckin," he said. "But don't discount Starbucks. I still hold Starbucks in my portfolio. I love the long-term chart here."
After a somewhat rocky second half in 2019, Starbucks' stock is now back on track, as is its China business, Gordon said.
"I like Starbucks and continue to hold it," he reiterated. "I certainly wouldn't discount this for [Luckin]."
Starbucks shares gained about 1% on Thursday.
Disclosure: Gordon owns shares of Starbucks.
