Coffee operator Caffe Nero has continued to steam ahead with its expansion plans, snapping up eight sites from its peer Coffee Republic. Interestingly, Caffe Nero owns about 6% of Coffee Republic, which decided to sell the stores as they do not fit the geographic criteria for CR's new food-led Deli format. The sites are predominantly in the south and west of the UK. Conversion of the sites is predicted to be completed within two months at a fit-out cost of £50,000 per unit. The group now has 171 locations across the UK, with all new stores performing well. In a business update, chairman Gerry Ford commented that trading for the second half of the year has 'materially outperformed expectations'. The market expect sales for 2004 to reach £49m, jumping to £65m in 2005, while pre-tax profits should hit £2m for the year to May 2004 and £2.77m next year. 2005's EPS prediction of 3.8p provides a rather high prospective p/e of 26. Considering the shares have risen 64% since our last recommendation in February to 98.5p and 300% in the past year, it's time to wake up, smell the coffee and top-slice your gains.