Is Starbucks Stock A Buy In 2018/2019?

Is Starbucks Stock A Buy In 2018 Righteo this is the stock that seemingly everyone is talking about. Some people say the stock is complete garbage (Cough Jeremy) and others don’t mind the look of it.

So in this video I wanted to give you guys a more all-round picture of Starbucks stock. The good, the bad and the ugly. We’ll begin with a speedy overview of the stock, then get into the numbers, the positives, negatives and the return that you could expect at the current price level.

So let’s start with a quick overview of the stock Starbucks are known as the company that globalized coffee. They have over 26,000 stores around the world, in 65 different countries serving almost 80 million coffee guzzling customers a week.

Starbucks culture of coffee was founded around community, theatre, customer experience and most importantly great coffee. And when they started implementing this strategy in late 1980’s coffee was not nearly as much as part of the culture in America as it is today.

Starbucks sort of grew along with the rise in coffee culture in the U.S. Today as China’s coffee culture grow’s, Starbucks are trying to do the same as they did back then, grow with the culture. Now let’s talk about some of the positives of owning Starbucks Stock.

Later on in the video I’ll get into the negatives as well. 1st Positive is their competitive advantage in their brand name and reputation. We’ve talked about the culture that Starbucks tries to operate in.

Good quality, customer experience and a sense of community. Now over time they’ve developed a good brand name and reputation from this. What this means is that they can sell their products, their coffee for a higher amount then other stores.

Now some people have been criticizing Starbucks stock for their high price products. But Starbucks have earnt the right to do so, by developing a good reputation. At the end of the day it’s about the customer.

And if the customers willing to pay extra money for a coffee because it’ll look cooler on Instagram that is a major competitive advantage for Starbucks. 2) Opportunity for Growth In China. So I’ve talked about how Starbucks grew with the growing coffee culture in the United States back in the 80’s.

It seems that the same thing is happening in 2018 with China. China’s middle class is growing at rapid rates and as the population gets richer they spend more money on discretionary items. Items such as coffee.

I actually had a Chinese lad stay with me about a year ago and he reckoned the Chinese love coffee nowadays. So Starbucks are planning on capitalizing on this movement. By opening a new store in China every 15 hours for the next 4 years.

3) It’s going for a good price So let’s look at the numbers. Over the past month Starbucks price has plummeted and we’ll address why a bit later in the video. It used to be around $58 and now its dropped to $50.

6. The earnings per share is $3 and P/E ratio is 16.6. It’s a pretty big company around $70 billion and they pay a dividend of 2.81%. So I’m going to take the earnings and the price in order to figure out the expected return.

Now this is the formula that I use to figure it out. Price obviously is $50.6. Earnings is $3.05 but I’m going to be conservative and say owners earnings is $2.50. Starbucks expects the growth in earnings to be 12% but again let’s be conservative and say 6%.

If we use a little algebra we can figure out that the expected return is 10.8% based on the current price, earnings and growth rate. And the last positive I wanted to mention was that Starbucks is good business to own.

Why because it can turn money into more money at a high rate. If we look at Starbucks return on invested capital we can see that it is really high. That means they turn your capital into more money quickly.

The sign of a great business. Ok enough of this positive talk, let’s get into the negatives of Starbucks stock. 1) And we’ll start with the glaring one. Starbucks expects to close 150 stores in 2019.

This is an increase of about 100 more than they normally close. Now the problem that I think we had with Starbucks is that they over expanded too quickly. And this is actually quite a normal thing to see.

Shareholders love to see that companies are growing and expanding so companies sometimes exaggerate growth. I see it with a lot of companies actually. There shareholders letters are filled with the new stores and intiativies that they’re opening, but it does mean that they are they are using their money to expand efficiently.

So Starbucks have decided to trim some of the underperforming stores. It may not look good, especially with those who just read the headlines but I think it’s a sensible move. 2) The second Con or negative is that there leader the guy who started everything is no longer ceo and is stepping down as executive chairman.

Howard Shultz is the guy who had the vision of where Starbucks would go and he created the whole culture within the business. 3) The Final negative is that Starbucks is one of the more riskier stocks to own in a recession.

Because in a recession people have less money, hence less money to spend on discretionary items like coffee. So hopefully that’s going to give you guys a more all-round picture of Starbucks. Its not all doom and gloom as some say and its not fully positive either, as with everything there is a balance.

So I know you guys want to know my opinion on the stock. And I’m going to give you a pretty PC answer. Here we go, “Starbucks is one of the better stocks in the market based on the current price levels, whether you think it’s a buy or not that’s always up to you and your investing style”.

You know I love to be PC, not really. Anyway as always if you want more videos on different stocks around the United States and the world then subscribe to the channel. Also let me know your thoughts in the comments below, I love reading them.

Till next time, bye. radio this is the stock fit seemingly everyone is talking about some people say the stock is complete garbage Jeremy and others don't mind the look of it so in this video I wanted to give you guys a more all-around picture of Starbucks stock the good the bad and the ugly we'll begin with a speedy overview of the stock then we'll get into the numbers of the positives negatives and the return that you could expect to get at the current price levels so let's start with a quick overview of the stock Starbucks are known as the company that globalized coffee they have over 26,000 stores around the world in 65 different countries serving almost 80 million coffee guzzling customers a week starbucks culture of coffee was founded around community-theater customer experience and most importantly great coffee and when they started implementing the strategy in the late 1980s coffee was not nearly as much as a part of the culture and America as it is today Starbucks sort of grew along with the rise in coffee culture in the u.

s. today as China's coffee culture grows Starbucks are trying to do the same as they did back then grow with the culture now let's talk about some of the positives of owning Starbucks stock later on in the video I'll get into the negatives as well first positive is their competitive advantage in the brand name and reputation we've talked about the culture that Starbucks tries to operate in good quality customer experience and a sense of community now over time they've developed a good brand name and reputation from this what this means is that they can sell the products the coffee for a higher amount in other stores now some people have been criticizing Starbucks stock for the high priced products but Starbucks have earned the right to do so by developing a good reputation this high price is not a negative at the end of the day it's about the customer and of the customers willing to pay extra money for coffee because they'll look cool on the Instagram that is a major competitive advantage for Starbucks seeking positive is the opportunity for growth in China so I've talked about how Starbucks grew with the growing culture and the United States back in the 80s it seems that the same thing is happening in 2018 with China China's middle class is growing at rapid rates and as the population gets richer they spend more money on discretionary items items such as coffee I actually had this Chinese lad stay with me about a year go in he reckoned the Chinese love coffee nowadays so Starbucks are planning on capitalizing on this movement by opening a new store in China every 15 hours for the next four years food positive is this going for a good price so let's look at the numbers of the past month Starbucks price has plummeted and rural dress why a bit late in the video it used to be around 58 dollars an hour strop 250 point six the earnings per share is three dollars MP ratio is sixteen point six it's a pretty big company around 70 billion and they pay a dividend of two point eight one percent so I'm going to take the earnings and the price from the starter in order to figure out the expected return now this is the formula that I use to figure it out price obviously is fifty point six dollars earnings is three point oh five but I'm gonna be conservative and say owners earnings as two dollars fifty Starbucks expects the growth anew needs to be twelve percent but again let's be conservative and say six percent if we use a little algebra we can figure out that the expected return is ten point eight percent based on the current price earnings and growth rate in the last positive I wanted to mention was that Starbucks is a good business to own why because it consumed money and some more money at a high rate if we look at Starbucks return on and Vista capital we can see that it is really high that means they turn your capital and some more money quickly the sign of a great business okay enough of this positive talk let's get into the negatives of Starbucks stock and we'll start with the glaring one Starbucks expects to close a hundred fifty stores in 2019 this is an increase of about a hundred more than they normally close now the problem that I think we have had with Starbucks is that they have over expanded too quickly and this is actually quite a normal thing to see shareholders love to see that their companies are growing and expanding so sometimes companies exaggerate growth I see it with a lot of businesses actually the shareholder leaders are filled with of the new stores and initiatives that they're opening but it does not mean that they are using their money to expand efficiently it's just used to please shareholders so Starbucks have decided to trim some of the underperforming stores it may not look good especially with those who just read the headlines but I think it's a sensible move in the long term the second con or negative is that the leader the guy who started everything is no longer CEO in a stepping down as executive chairman Howard Schultz as the guy who had the vision of where Starbucks would go and he created the whole culture within the business and the final negative is that Starbucks is one of the more riskier stocks to own in a recession because enter a session people have less money hence the least money to spend on discretionary items like coffee so hopefully that's going to give you guys a more or ramp picture of Starbucks it's not all doom and gloom as some say and it's not fully positive either as with everything there is a balance so I know you guys want to know my opinion on the stock and I'm going to give you a pretty PC answer here we go Starbucks is one of the better stocks in the market based on the current price levels whether you think it's a buy or not that's always up to you and your investing style you know I love to be PC not really anyway as always if you want more videos on different stocks around the United States in the world then subscribe to the channel also let me know your thoughts and the comments below I love reading them till next time bye


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