Starbucks Corp (SBUX)

echofarmer (27.55) Submitted: 3/14/07 12:01 PM

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China, China, China... How about Italy, Norway, Sweden, The Netherlands, Finland... There are coffee houses all over these countries, yet no Starbucks. They don't need to launch into China to add 5000 - 10000 locations.

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darkflame (99.08) Submitted: 4/12/07 7:54 PM

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Tom.... You might be right, and this company is growing and can grow a lot in china, but it sports a high P/E, low insider ownership, and insiders actually dumping their shares... I see single movements of millions of dollars. I sort of have a rule, I never buy stocks when the insiders dump it, NEVER. And recently since I got greedy in CAPS I also quit CAPsing stocks when the insiders dump it.

I'll consider buying and CAPsing SBUX if it gets down to 20. Yeah...I want too much, I'm too demanding you may say. But the stock market is full with stocks which are being given away for free (PBR, PTR, ASEI, CHK, RAIL, USG, COP, NOOF, QSII, WYNN...), so why would I really pay for this one ?

But hey, cool pitch, I enjoyed it.

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Haise (< 20) Submitted: 5/10/07 12:28 PM

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It would be interesting to see how Starbucks would do in Europe, because I have a feeling Europeans wouldn't go for it. They don't love American brands like the Chinese do. Where McDonald's and Coca-Cola manage to do well enough, I can see where coffee could be a "sacred" ground for Europeans and they wouldn't take kindly to American capitalism screwing it up. There's probably a market for Starbucks, but they won't be nearly as concentrated (on a per capita basis) as they are here or could be in China and India (which seems to be overlooked in favor of China too often).

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RainerWysocki (33.02) Submitted: 5/16/07 5:01 PM

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Fully agree, I like "sacred". They got good coffee there, not only the Italian one and more importandly they believe in the quality of their coffee and the way it has to be consumed, and it is not a McDo's way.
A European from origins

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DemonDoug (99.98) Submitted: 6/22/07 2:53 PM

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SBUX has dropped into a decision time zone. I've been tracking and patiently waiting for SBUX for about 2 years now. It is sitting near it's 2 year low. I'm in partial agreement with darkflame (p/e 32 still a bit high, insider selling). I would like to add: What will be the first thing to go if we have a recession? Besides 4 dollar oranges from WFMI, it would be five dollar chai double whip light whop mocha choca lata voulez vouz cocher avec moi espresso latte over easy coffee from SBUX. (As you can tell I'm not a coffee guy, but I am pretty damn funny.)

That said, I look at the SBUX market cap. At around 19 billion, one could easily make a case for SBUX being at a market cap of 40-50 billion in 10-15 years. The problem is, what about the next 3-5 years? If we have a recession, profits fall, p/e contracts further, we could conceivably also see a scenario where the price per share drops below 20. That also means there isn't a margin for error, and a doubling of value in 15 years is a historically poor return (if it goes from 20-40B, plus share dilution probably takes you below doubled share price appreciation).

Yes, they have excellent management, excellent philosophy of employers and employees, generally a good company. This is a stock I want to own. But at a p/e of 32, with an economic downturn coming up fast?

If the price per share drops, and I can buy more SBUX in 6-12 months than I can today for the same money, and not watch my buy in price point drop (as much), my ROI will be much higher, and my margin of safety will also be better than it would be today.

Right now I'm sort of in that can't decide mode, both in real life and in CAPS, on both WFMI and SBUX. Although after doing analyses on both these stocks, I do believe I am going to do what I have done for the past 2 years: watch patiently and wait until they either become a screaming buy, or they appreciate higher without dropping from here and I look to other stocks for investment. I know it's unlikely to expect a reply to my reply, but I'm wondering what your thesis and thoughts are on SBUX right now Tom.

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slbutton (99.86) Submitted: 8/08/07 8:21 AM

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I'm writing from Nicosia, Cyprus. Almost every day, I walk past one of two Starbucks, both of which appear to be doing good business, especially with the 17-30 crowd--even though the coffee drinks are more expensive than they are in the States; even though Starbucks is competing with all of the traditional coffeehouses, as well as some newcomers like Gloria Jean's. I've lived in Italy, and I agree it will be a hard market to break into--but how many McDonalds are there in Rome? I remember four within a ten-minute walk of the Camp de'Fiori, and most of the customers were Italians, not tourists. Ten years ago, I would have bet money that European taste would prevail over the invasion of Big Macs and eight dollar enormous frozen "cappuccinos" (if it comes in a bucket, it's NOT a frickin' cappuccino!). But now, I'm not so sure...

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