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With shares of Starbucks (NASDAQ:SBUX) trading at around $53.64 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:
C = Catalyst for the Stock’s Movement
You really messed up this time, didn’t you? This pertains to SBUX selling in the single digits in 2009. Imagine having bought the stock then. What would you be doing now? Don’t worry; you’re not alone. If only we all believed in the premise to buy when there’s blood in the streets. What’s done is done, and all we can do now is look ahead.
Starbucks has a reputation for great growth and okay profitability. At the same time, the stock has rewarded its investors through the years. A 1.60% yield isn’t anything to get excited about, but you may get excited about new opportunities.
Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.
Starbucks has a few new products. This will likely have more of an impact on existing customers. The novelty of the coffee shop craze has worn off. Almost every caffeine fiend has already chosen his or her favorite destination for a daily fix. On the other hand, Starbucks regulars seem to be willing to try new things, which may bode well for Starbucks. Two of these products will be of the use-at-home variety (i.e. Verismo, K-Cups.)
One of the biggest moves by Starbucks has been the acquisition of Teavana. With the tea industry seeing double-digit growth, how could Starbucks not get involved? It’s also a logical growth opportunity for the company. In addition to that, it matches their emerging market expansion. Tea is more popular in Asia, Eastern Europe, and the United Kingdom than in the United States, but Starbucks has the potential to grow the market here.
As far as analysts go, 21 are on the Buy side, nine recommend Hold, and zero are on the Sell side. While listening to one analyst would be risky, listening to 21 out of 30 that agree isn’t such a bad idea.
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