Of all the companies I expect to rebound in a sharp way, Starbucks Corporation (NASDAQ:SBUX) is among my top picks, for a few reasons. The coffee chain has experienced a significant drop off in revenue as the economy has shifted towards a social distancing friendly economy.
The days of grabbing a Starbucks coffee on the way to work are limited now. But as the economy reopens and folks begin commuting in a usual way, Starbucks will be an obvious and direct beneficiary of such mandate adjustments.
For the time being, Starbucks is likely to use this pandemic as a reason to justify closing underperforming stores. This move would have likely taken place regardless, but has been accelerated by the situation. Starbucks recently announced the potential closure of 200 Canadian locations over the next two years, the start of what may become further cost cutting and a strategic shift toward cost containment moving forward.
Recent activist investor interest in Starbucks by Bill Ackman has led to some renewed interest in the growth company by value investors who may believe now is the time to grab Starbucks as a growth at a reasonable price play.
The company's growth potential in China and other emerging markets is compelling, and with one of the world's best and most recognizable brands, Starbucks should have no problem regaining its previous growth trajectory.
The company's capital investment plans may take a breather over the short term; however the long term still looks very bright.
Invest wisely, my friends.
Related Stories
