Is Starbucks an Attractive Investment?

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With shares of Starbucks (NASDAQ:SBUX) trading around $75, is SBUX an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Starbucks is a roaster, marketer, and retailer of coffee operating worldwide. The company purchases and roasts the coffees it sells along with handcrafted tea and other beverages, as well as a variety of fresh food items through its stores. Starbucks sells a variety of coffee and tea products and licenses its trademarks through other channels like stores and national food service accounts. In addition to its flagship Starbucks brand, the company’s portfolio features Tazo Tea, Seattle’s Best Coffee, Starbucks VIA Ready Brew, Starbucks Refreshers beverages, and the Verismo System by Starbucks. Starbucks has developed a solid reputation over the past several years, which has generated a lot of buzz for its products.

Starbucks’s baristas are about to get a digital bump in their paychecks — the coffee chain’s updated iPhone app will allow customers to make a tip when paying with their phones. The new version of the app, due out March 19, will give customers a choice between no tip, 50 cents, $1, or $2 when checking out. They can add the tip up to two hours after they make the purchase. Until now, customers using either their mobile phone app or credit or debit cards to pay could not include a tip on their bill. About 10 million customers have already downloaded the Starbucks app, which accounts for about 11 percent of in-store purchases. Making payments will also be somewhat easier in the new version.

Once the app is open, all a customer will have to do to reach the pay screen is shake the phone, rather than page through the various menus to get to the bar code. Starbucks spokeswoman Linda Mills said the new app is being debuted for iPhones. Other versions, such as those for Android phones, are due out soon. The Starbucks app, while very popular with customers, caused some negative publicity for the company in January after it was revealed it left customers’ passwords open to attack. The company announced a software fix the next day.

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