Is Now the Right Time to Invest in Starbucks?
We’re human. It’s emotionally difficult to invest in a company that has gone up a lot in value during the past year or so. Smart investors, however, should leave their emotions at the door, (I know you’ve heard that before). All investors I know take at least a peak at a stock’s recent performance before they buy it. If a stock has gone up a lot, it’s easy to be thinking “coulda, woulda, shoulda”…
I always find it strange, stupid actually, when I hear financial advisers on TV say things about a stock like, “If you already own it and it’s gone up a lot in value, maybe you should sell it and lock in some of those profits. There still seems to be a big upside though so if you don’t own it, you might want to consider getting it”. That line of reasoning makes no logical sense at all. It appeals to the emotions and those aren’t the friends of the smart investor.
I think now is an amazing time to invest in Starbucks, whether you already own some or not. It pays a dividend, not huge but close to 2 percent, and there is a ton of upside.
I like to look at stocks that the masses, the sheep, don’t get. Starbucks is one of those. I can see people thinking, “it’s had it’s moment in the sun”. Coffee shops are closing. It’s not a novelty anymore. The developing countries either don’t like coffee or won’t be able to afford it.
It’s the international growth potential of Starbucks that impresses me the most. I am living in Shanghai and I can see how good Starbucks is at changing a culture. Not only do the Chinese love it, they buy the expensive stuff. They love the brand and get it to go. They pack hundreds of coffee shops in the city and just dominate with their brand image. The same thing will happen in India and Brazil. I heard the CEO talking about their plans and he’s the “Steve jobs of coffee”.
Starbucks is also breaking into the supermarket business with their incredibly valuable logo and they are marketing geniuses. They think differently in each culture they enter. They are flexible. They always think outside the box. They have almost 25 million Starbucks facebook fans and don’t advertise traditionally. They are paying attention to the realities of today and tomorrow rather than doing everything by the book of yesterday. Many companies stagnate because they play by the rules of the past. Starbucks creates the future. This kind of company has the ability to keep beating analyst’s expectations and expect them to keep doing that. I think Starbucks it will hit $55 USD,or over, before 2014.
Good article. American investors really can’t feel the growth of Starbucks internationally and don’t see how obvious it is that they will continue to dominate in China as they move west. I go to business about twice a year in Shanghai or Beijing and noticed the exact same thing with the Chinese over the past 5 years or so. I can see it picking up in the hundreds of massive second, third, and fourth tier cities there. I think, for the same reasons you mentioned, Starbucks will continue to outperform analysts on Wall Street.
not time