06-25-2018, 03:48 AM
(This post was last modified: 06-25-2018, 03:49 AM by DividendDragon.)
(06-21-2018, 09:08 AM)divmenow Wrote: SBUX has no growth. 1% sales growth isn't going to cut it. Dividend means nothing if they stock keeps going down. The new CEO has now warned 3 straight quarters. Business is slowing and I have noticed stores in my area have been dead. No one is going to pay $5 for a Mocha Frappuccino any longer There's to much competition in this space. Stock still trades at a forward PE of 18.5. This stock will be in the mid $40's. Your safer just buying T
SBUX, Howard Schultz = GE, Jack Welch Greatness.
SBUX,Kevin Johnson = GE,Jeff Immelt. Disaster.
Absolutely agree with what Eric was saying regarding different opinions making a market.
I do think it's useful to give a more detailed narrative on my purchase though.
Starbucks remains an incredible cash generative company with a considerable economic moat derived from scale and branding.
With $2.6bn in FCF generated in 2017, the company isn't going anywhere.
Kill the brand as much as you like, it's still growing. Yes at a measly 1% but a company that generates a ton of FCF and has a global scale and brand is worth 18.5 p/e for me, even if it stops growing.
I'm really excited by the uptick in closures as this will increase efficiency.
The have space to grow in China and India and this isn't being fully appreciated. Of course, they may fail to grow in these areas but, I ask myself, considering everything, is SBUX worth $52 a share? Even if it stops growing...?Absolutely. If it drops to $40 I'll be happy to buy more and so will management via the increased buyback plan.
It does confuse me that T would be considered a better stock though since it has a tougher path to growth, has a much smaller moat around its business. On top of that it's massively leveraged. I do think they'll carry on growing the divi though.
Anyway just my two pence worth!
The market is always a crazy place so who knows where things will eventually end up.