DOCASA Inc (OTCMKTS:DCSA) is what a newly listed micro-cap company should look like: strong revenues, assets, multiple years of positive operations, exemplary yearly expansion, incredible growth opportunity, formidably competitive within a popular $10 Billion industry, and already bosting a near quarter billion dollar market cap. Given all of the buzz it’s started to cultivate already, it would only make sense to take a closer look.
DOCASA Inc – through its subsidiary, Department of Coffee and Social Affairs Ltd. has taken the United Kingdom by storm. With aggressive expansion and a focus on quality and culture, DOCASA (OTCQB:DCSA) is following the same growth path of Starbucks (NASDAQ:SBUX) in its infancy.
Starbucks opened its first location in 1971 and by 1988 [17 yrs] had grown to 33 locations. DOCASA, founded in 2010, reported having 13 operating locations at the close of 2016 [6 yrs in operation]. Starbucks reported revenue of $1.3 million in 1987, with at the time operating 17 locations (avg. $76,471 per location), while DOCSA reported revenues for the three months ending 2016 of $810,214 (avg. $62,324 per location).
This may in and of itself speak to the early action the market is beginning to see. Volume is starting to expand, and shares of the stock broke out of an eight-day trading range to close out last week. This could be because in addition to investors realizing the growing craze in the U.K. that DOCASA is successfully leveraging, the Department of Coffee and Social Affairs is also taking some exciting technological initiatives; such as with their fully functional mobile app.
Much like the Starbucks app, the DOCASA app allows consumers to pay for their coffee without needing a wallet. In addition, consumers can accumulate rewards on purchases, find locations, and refer friends – all within the app.
Also fueling the market’s excitement is the company’s most recent catalyst… the announcement of the Depadrtment of Coffee and Social Affairs opening a new workplace coffee shop at the offices of a leading Fortune 500 company in Canary Wharf.
“The UK-based coffee company has opened its third workplace coffee shop in London’s financial district, Canary Wharf, bringing the total coffee shop locations to 13. Department of Coffee and Social Affairs is now open and available to over 1,400 staff and their visitors at the Canary Wharf and Soho office sites every working day of the year.” According to the release, the Department of Coffee and Social Affairs has been serving coffee to working professionals through its two existing workplace coffee shops in Soho, London since 2014.
DOCASA Inc (OTCMKTS:DCSA) trumpets itself as a company focused on investment in the rapidly growing specialty coffee market, principally in the United Kingdom. DOCASA and its subsidiary, Department of Coffee and Social Affairs Ltd., headquartered in London, England, has established and is growing an award- winning, market-leading, UK specialty coffee shop and online retail business. DOCASA also continues to review opportunities in the broader international coffee market.
According to Company materials, “DOCASA is also pursuing the franchising and/or licensing of its branded shops and premium product offering outside of the UK to countries where the premium coffee market is rapidly expanding.”
That move would put this spunky emerging upstart on a playing field with the likes of Dunkin Brands Group Inc (NASDAQ:DNKN) and Starbucks Corporation (NASDAQ:SBUX).
And in a play similar to Keurig Green Mountain, Inc., (NASDAQ: GMCR), DOCASA, Inc. (OTCQB:DCSA) has positioned itself to take market share in the instant brew, k-cup & coffee pod market. DOCASA’s subsidiary, The Department of Coffee and Social Affairs, is offering its award-winning coffee in single serve Nespresso pods.
Time to Expand?
As noted above, the company just announced the opening of a new workplace coffee shop (its third location) at the offices of a leading Fortune 500 company in London’s financial district at Canary Wharf. Traders will note a solid 15% on the upside added to shares just during the past week as a result.
The company’s release continues to note that: “According to a study by the National Automatic Merchandising Association (NAMA), 90 percent of employees are more productive if they can get a beverage they want at work. The study has also shown that 91 percent of employees believe that a hot-beverage break is a good way to reduce stress before starting a new activity and saw an increase in employee satisfaction after such a break. In addition, four out of five employees preferred better coffee options at work, and having such an option makes them less likely to want to leave the office.”
DOCASA, Inc. President & CEO, Ashley Lopez said, “We have identified a unique niche in providing workplace coffee shops in the offices of blue chip multi-national businesses and will continue to target such opportunities. To be able to open in Canary Wharf a third one of these workplace coffee shops is a validation both of our brand and of the demand for our quality coffee and food offerings within the working environment. Sources within the organization tell us their staff’s daily interactions have increased significantly and that additional revenues are being generated.”
Just ahead of that, the company had announced the year-round availability of its innovative signature product, a cold brew coffee called “Bold Brew,” beginning Spring 2017. That will continue to be an important catalyst for the company. And we expect to get more information about it going forward.
With a current market cap of $194.7M, DCSA has an imperfect balance sheet. But for a coffee play, we’ve certainly seen worse. In addition, the company just started to get the top line cooking with a big quarter (ending November 30, 2016), where it took in nearly $1M in sales.
As noted earlier, the chart is “young” and this is clearly the early days for DCSA. But all signs suggest some potential expansion going on, with shares breaking higher on expanding volume. We suggest you keep an eye on this one. We will.