Thursday, July 14, 2005

SBUX

My last post was regarding short-term investments. This time I wanted to touch on a long-term investment I’ve been recently researching, Starbucks. This coffee empire is a company I see as undervalued with an almost unlimited potential for growth. Starbuck’s has had a historic routine of overperformance, yet this has resulted in very high expectations for the company. As a result, investors have constantly come to expect these same sort of results from the company which can sour even perfectly decent reports. Last winter, the stock went as high as $64, but has since dropped due to these expectations. But let’s take a look at the facts. Within the last decade, the stock has split four times and I believe another one is way overdue. Barring the newest ads regarding their doubleshot espressos and frappucinos, how many of you have actually seen a Starbuck’s ad? They manage to save millions on advertisement, as they choose to invest this money in employee training instead. Listed as a fast-food company by the Fortune 500, they have one of the most comprehensive employee training programs available, creating a high-quality product for their consumers. As well, the company has an excellent business sense, catering to both their employees and their customers. Currently, there are 6000 stores within the US, but by the year 2010, they hope to expand to over 20,000 stores. People joke about seeing a Starbuck’s on every block, but this is no coincidence. The reason for these expansions is due to the high demand for Starbuck’s coffee. They like to call themselves a “coffee company serving people,” but they do much more. Real estate is a major part of their success. Oftentimes, Starbucks occupy the busiest corners on the street which allow for maximum exposure. Just by building a store on a corner drives up the price of the property and the immediate area surrounding it. If the owners were to sell just their properties alone, they could probably retire. The company has partnerships with many large names, such as Albertson’s and Barnes & Nobles, not to mention their own line of products. They have their own ice cream, which has become the top selling brand of coffee ice cream in the nation. They just recently bought their own music company, “Hear Music,” in 1999 so they could package their own cd’s. That music you hear in the store, they own it. Starbuck’s has even launched its own credit card, the Starbuck’s Duetto Visa. With plans to open on the Nikkei Index, I believe Starbuck’s has a bright future ahead and long-term investors would be well advised to take advantage of this stock. That’s all I’ve got for now so good luck and happy trading.

1 Comments:

Blogger jontait said...

SBUX = easiest stock to trade ever.

http://stockcharts.com/def/servlet/SC.web?c=SBUX,uu[w,a]daclyiay[pb20!b20][vc60][iUb14!La12,26,9]&pref=G


Make sure you copy the entire URL and past it in your browser. Guess what position I have in SBUX right now?

7/14/2005 10:19:00 AM  

Post a Comment

<< Home