I should start out with declaring that Starbucks has been on my watchlist for a very long time. I do view this company as an incredible one from the perspective that retail is dying, and this company found a way to not only survive, but grow, in this environment.
Starbucks (NASDAQ:SBUX) is a company which is ubiquitous in the part of the world I live, with coffee shops on nearly every street corner.
This situation I find myself in, being able to find a Starbucks anywhere in the city within a few blocks, is what Starbucks’ management team wants in China. The company is opening thousands of locations abroad, continuing to aggressively expand its footprint.
This massive Asian expansion will undoubtedly turn out great for the coffee supergiant. However, there have been concerns voiced by the market of late that the effects of the coronavirus could be longer-lasting than initially expected. Additionally, since Starbucks’ business model is one which does not involve franchises generally, the company’s corporately-owned locations could take a much larger hit in the near-term than if they were franchised, a worry priced in by the market.
I see this near-term concern as a buying opportunity for investors, given the growth outlook for the company’s Chinese business long-term. I would encourage investors to avoid the near-term noise with Starbucks, add this company to your watch list, and nibble away if the price is right.
Currently, shares of Starbucks are higher than my intrinsic value, so I’m on the sidelines but it’s a great stock to watch.
Invest wisely, my friends.
