Starbucks shares buy or sell

Starbucks shares buy or sell

Posted: Dobropobeditzlo On: 23.05.2017

SBUX has the most recognizable coffee brand in the world. What started out as a small coffee shop in Pike Place Market is an international conglomerate with more than 23, locations as of Even though Starbucks' initial public offering IPO took place back in , the period after saw its prices skyrocket.

Unsurprisingly, the stock garnered a lot of positive press for its performance.

However, there are some real risks facing the Starbucks brand in the future, including global competition, commodity prices and changing dynamics in the retail market. It is not necessarily true that "what goes up must come down," but there is also no reason to believe Starbucks will continue to grow regardless of market conditions. Investors need to investigate whether a stock is a good buy based on expected future results, not on what occurred in the past.

SBUX Stock Price - Starbucks Corp. Stock Quote (U.S.: Nasdaq) - MarketWatch

Future earnings growth depends on consumer tastes, government regulations, corporate management, input prices and many other factors. These factors are present for any business, but every business interacts with them differently and Starbucks is no exception. The following are a few factors that could undermine future earnings growth for Starbucks investors.

Starbucks continues to expand into international markets , partially because many prime locations in the United States already have Starbucks locations.

Comedian Lewis Black once joked he ran across two Starbucks cafes located directly across the street from each other in Texas, which is a location strategy that only works on someone with extreme short-term memory loss.

It turns out this is true, but Black undersold the market saturation. There are actually three separate Starbucks cafes at the intersection of Shepherd and West Gray in Houston. The company made significant investments in China and India with Starbucks Coffee China and Asia Pacific CAP , but nobody knows the future success of this endeavor.

Buy or Sell SBUX (Starbucks Corporation) stocks?

Investors should pay particular attention to the performance of foreign-placed Starbucks cafes, particularly CAP. CAP has had some success, but competitor brands have moved into the same emerging markets, including McDonald's McCafe and Yum!

Brands such as KFC. The success CAP reported was prior to the collapse of the Shanghai Stock Exchange in June , leaving a lot of uncertainty about American business interests in the region.

starbucks shares buy or sell

This is a This is great for Starbucks shareholders who had a stake before , and it is still very good for shareholders who bought it sometime between and It is not a great thing for prospective shareholders because they already missed out on all of those gains. There is no economic law that states Starbucks stock will continue to grow.

Everyone understands the principle of " buy low, sell high ," and Starbucks seems to currently be a "buy high" stock.

starbucks shares buy or sell

Starbucks is an indirect casualty of companies such as Amazon. These companies do not compete directly with Starbucks or reduce the demand for trendy coffee, but they do threaten brick-and-mortar allies such as Best Buy Co.

Partnerships between Starbucks and brick-and-mortar companies have been a boon to the coffee giant. Starbucks CEO Howard Schultz addressed these shifts directly in He argued that Starbucks would continue to evolve in online-friendly ways, specifically noting the popular Starbucks mobile app. However, a lot of capital has already been invested in its brick-and-mortar locations, and these locations struggle to bring in as much revenue as they once did.

Starbucks openly admits it is vulnerable to commodity prices. The company spends an extraordinary amount of money on coffee beans, sugar, milk and other commodities.

It is not nakedly exposed to commodity fluctuations; Starbucks uses derivative contracts as a hedge just in case prices skyrocket.

3 Terrible Reasons to Sell Starbucks Stock -- The Motley Fool

And there is evidence to suggest these measures are effective. Starbucks' prices was barely affected and actually continued to grow. Futures contracts are only good for a limited amount of time; five years is about as long as most go, so a prolonged increase in important ingredients puts pressure on the prices.

The American stock market had a charmed climb in the past five years on the back of the Federal Reserve's low interest rate policy. Stocks in nearly every sector performed extremely well, often making up all of the losses suffered in the Great Recession. Starbucks' shareholders certainly benefited from this pro-stock market policy, but the fed funds rate will not be at zero forever.

There is no fundamental economic reason that stock prices should continue to go up just because time marches forward. Some companies become more valuable, but others lose value over time. The only time the broader market should rise is when American public companies, as a whole, are valued more highly than in the past.

starbucks shares buy or sell

The large growth in stock prices does not necessarily warrant a bubble, and there is no guarantee that a bursting bubble would drive down Starbucks' stock prices. However, investors should understand the possibility exists. The oldest and most persistent argument against Starbucks is that brand-name coffee is a luxury item, and luxury items depend on an economic setting where individuals have plenty of disposable income.

If the economy goes through a prolonged period recession or downturn, it is reasonable to expect that Starbucks will struggle as much as the rest of the market would, if not more.

Dictionary Term Of The Day.

Buy, Sell, or Hold: Starbucks -- The Motley Fool

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The Biggest Risks of Investing in Starbucks Stock SBUX By Sean Ross Updated July 12, — Underperformance in Emerging Markets Starbucks continues to expand into international markets , partially because many prime locations in the United States already have Starbucks locations.

Loss of Brick-and-Mortar Partners Starbucks is an indirect casualty of companies such as Amazon. Commodity Price Fluctuations Starbucks openly admits it is vulnerable to commodity prices.

Market Risks The American stock market had a charmed climb in the past five years on the back of the Federal Reserve's low interest rate policy. A look at the pros and cons of investing in Starbucks stock or a franchise. Is it wise to purchase Starbucks shares? Even though Starbucks is a well established company, there is always a threat from competitive forces.

A departing CEO and being vocal on political issues has not and will not affect the company in the long run. Examine the industry position of Starbucks Coffee Company from the perspective of the company using the Porter's Five Forces model.

The coffee giant continues to expand locations in an uncertain economic environment. Haven't we seen this before? Starbucks's next leg of growth will come from mobile payments and Asia, especially China. Read about why billionaire Howard Schultz chose to keep Starbucks a chain rather than franchising and how he led the chain Find out why Howard Schultz left Starbucks in , even though he was very successful, and what brought him out of retirement Learn about Howard Schultz's background.

Discover where he got his education and his professional background before becoming Learn what corporate social responsibility means and find examples of socially responsible businesses that contribute measurably Brand equity is the heart of reputation building for companies and products. With solid equity, the quality of a service Arm yourself with priceless advice from Howard Schultz and incorporate his savvy into your existing or future entrepreneurship No thanks, I prefer not making money.

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