Mapper
05-04-2011, 03:11 PM
I'm interested in this stock and contemplating an entry point.
Yes, PE is crazy.
No, I don't have solid technical/fundamental basis for my interest. None, zip, zero...this is gut play piece.
Here's my case:
First off, it pays a dividend. I no longer purchase non-dividend paying stocks. I'm looking to go long (likely years, maybe decades) and use a DRIP. I am not expecting quick short gains here, SBUX is no hidden secret. Second, I think SBUX is a prime candidate to become Dividend Growth stock. Getting in on Dividend growth stocks before they are recognized as such is a good long move. Theoretically, as the company increases dividends the values rises too.
Why do I think it could become a Dividend Growth stock?
-Strong business model was strengthened when they contracted during the recession. It's been through the ringer and dumped a lot of baggage.
-Geography. The process of shedding baggage left the company with the best locations. See my name, I study this stuff and have been very impressed with the locations of remaining outlets
-Household name. You sit in meetings and people refer generally to "coffee" as "Starbucks" kind of like Kleenex.
-A whole generation of coffee drinkers are growing up with the above mentality.
-Shed some of the Genericana image but maintained many of the customers.
-McCafe wants to do the same but are much too enmeshed in the American psyche as "cheap" and "generic".
-A mainstream brand that people aspire to. Folks want to walk around with a Starbucks cup instead of a McCafe cup. Think BMW vs. VW.
-Single cup coffee. Buying Starbucks at the grocery should be able to increase sales
-Green Mt. deal. Both are growing companies with a good reputation that are beginning to work together. A willingness to "work" with your competitor is a smart move for GROWTH in my opinion.
Last but not least...in fact most important in my mind.
-The coffee is absurdly good for a mainstream brand. I personally HATE shopping at, consuming or being anywhere near most mainstream, genericana stores/brands...I support local, organic, Fair Trade, you name it. I stay as far away from McCafe as possible. Way too much of my personal income goes toward things I eat...it's a personal thing, I don't expect everyone to agree, but I think the number of Americans with this attitude is growing.
I can make my own coffee, I can easily access "better" coffee. I like good coffee. In my mind Starbucks coffee makes the grade. I don't mind their shops, I think the coffee is good and they doing a good (much better) job of selling out without selling out the image...in fact they have bought much of it back during the recession. I think the single cup coffee and the Seattle's Best, Green Mt. relationships will help drive volume growth without destroying the Starbucks name. The "old" SBUX tripped the "new" SBUX can go further...I am hoping.
Finally, many of us are addicted to coffee. The less we smoke, the more we work, the less we drink booze...the more we drink coffee.
I don't buy many individual stocks...Anyone want to talk me down?
Yes, PE is crazy.
No, I don't have solid technical/fundamental basis for my interest. None, zip, zero...this is gut play piece.
Here's my case:
First off, it pays a dividend. I no longer purchase non-dividend paying stocks. I'm looking to go long (likely years, maybe decades) and use a DRIP. I am not expecting quick short gains here, SBUX is no hidden secret. Second, I think SBUX is a prime candidate to become Dividend Growth stock. Getting in on Dividend growth stocks before they are recognized as such is a good long move. Theoretically, as the company increases dividends the values rises too.
Why do I think it could become a Dividend Growth stock?
-Strong business model was strengthened when they contracted during the recession. It's been through the ringer and dumped a lot of baggage.
-Geography. The process of shedding baggage left the company with the best locations. See my name, I study this stuff and have been very impressed with the locations of remaining outlets
-Household name. You sit in meetings and people refer generally to "coffee" as "Starbucks" kind of like Kleenex.
-A whole generation of coffee drinkers are growing up with the above mentality.
-Shed some of the Genericana image but maintained many of the customers.
-McCafe wants to do the same but are much too enmeshed in the American psyche as "cheap" and "generic".
-A mainstream brand that people aspire to. Folks want to walk around with a Starbucks cup instead of a McCafe cup. Think BMW vs. VW.
-Single cup coffee. Buying Starbucks at the grocery should be able to increase sales
-Green Mt. deal. Both are growing companies with a good reputation that are beginning to work together. A willingness to "work" with your competitor is a smart move for GROWTH in my opinion.
Last but not least...in fact most important in my mind.
-The coffee is absurdly good for a mainstream brand. I personally HATE shopping at, consuming or being anywhere near most mainstream, genericana stores/brands...I support local, organic, Fair Trade, you name it. I stay as far away from McCafe as possible. Way too much of my personal income goes toward things I eat...it's a personal thing, I don't expect everyone to agree, but I think the number of Americans with this attitude is growing.
I can make my own coffee, I can easily access "better" coffee. I like good coffee. In my mind Starbucks coffee makes the grade. I don't mind their shops, I think the coffee is good and they doing a good (much better) job of selling out without selling out the image...in fact they have bought much of it back during the recession. I think the single cup coffee and the Seattle's Best, Green Mt. relationships will help drive volume growth without destroying the Starbucks name. The "old" SBUX tripped the "new" SBUX can go further...I am hoping.
Finally, many of us are addicted to coffee. The less we smoke, the more we work, the less we drink booze...the more we drink coffee.
I don't buy many individual stocks...Anyone want to talk me down?