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Growth is Still Possible at Starbucks



December 21, 2012 – Comments (0) | RELATED TICKERS: SBUX

Starbucks has had an up ($62.00) and down ($43.04) year but currently resides right in the middle at $53.36.  Not exaclty a bargin price but I do believe there is a profit still to be made.  Starbucks also sports a solid and recently steady profit margin of around 10%.  What excites me about Starbucks is there growth in China and adaptation into the Chinese culture.

After reading up on Starbucks expansion into China I am very encouraged as to what the future will bring.  Starbucks has adjusted there menu to Chineses taste (ex: green tea) and the population has responded strongly.  Also carrying around a Starbucks cup is seen as being a part of the middle class, something to strive for.  Belina Wong, president of Starbucks China, said in an interview that Starbucks aims to roll out 800 new stores in the next three years to add to its existing fleet of 700.  If this isn't growth i don't know what is.  Starbucks has predicted earnings growth of 19% next year and I believe they can top this with good results from China.

The arguement of why Starbucks cant be sucessfull has been proven wrong to me many times.  People are willing to pay for the experience offers and just simply for the product, it is a sort of addiction that the younger generation loves.  As the years go by Starbucks will continue to suceed because they have a loyal customer base that continues to expand as younger generation pass their views down. 

The bigger question, is now the time to buy? I cant say for sure, a small dip would be nice but who knows if that will happen.  I will continue to monitor Stabucks and look for a time to buy in on there growing businees.

Fool On!


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