There’s nothing like a steaming-hot cup of coffee to get you started in the morning; and for investors, there’s nothing like a freshly brewed pot of profits to get a stock going. These two pleasures in life can be found in one company — Starbucks (SBUX). The worldwide dominator in the coffee space is one of the most recognizable brands in the world, and with strong sales and earnings Starbucks story is now a case study in how to run a successful specialty beverage operation.
Over the past 12 months, SBUX stock shares have served investors more than an 80% gain, so you might think Starbucks shares are ready to cool down. But here are five reasons why Starbucks stock will remain piping hot.
SBUX earnings are bold. On April 21, the Seattle-based coffee merchant Starbucks reported a remarkable eight-fold increase in second-quarter earnings. The fiscal Q2 profit of $217.3 million, or 28 cents per share, crushed the $25 million, or 3 cents per share, the company earned in the same quarter a year ago. Starbucks sales also rose nicely, coming in at $2.53 billion in fiscal Q2. Both bottom- and top-line numbers easily bested consensus forecasts for 25 cents per share on revenue of $2.41 billion. Starbucks earnings like these are very powerful reasons to buy SBUX stock.
Starbucks sees increased traffic. For the first time in 13 quarters, Starbucks saw an increase in the number of customers. SBUX reported a 3% increase in the number of people coming into stores, and a 5% increase in the average purchase. Those metrics helped U.S. same-store sales rise by 7%. International traffic also grew, rising 6% in the quarter. Starucks saw a 7% rise in same-store foreign sales.
SBUX stock has enhanced outlook. Starbucks also boosted its forecast for the full year’s adjusted profit. The company now expects to earn between $1.19 per share and $1.22 per share. That’s up substantially from the previous forecast of $1.05 per share to $1.08 per share. The upwardly revised outlook also topped consensus forecasts for full-year profits of $1.12 per share.
New Starbucks product launches. Starbucks has demonstrated that it’s always looking for new ways to innovative, and for new products to enhance its bottom line. That means Starbucks sales have gone beyond its baristas. In September, the SBUX released its Via gourmet instant coffee line. The company also has upgraded its food menu over the past six months, including the introduction of smoothies and a more extensive lineup of baked goods. The latest new Starbucks product release is gourmet ground flavored coffees, which the company plans to sell at hundreds of thousands of grocery stores beginning in June. The new blends, called “Starbucks Natural Fusions,” include vanilla, caramel and cinnamon flavors.
SBUX stock enjoys expert stewardship. Over two years ago, Starbucks was in big trouble. The stock price was sinking, and the recession had really clamped down on revenues. But in an example of expert stewardship, Starbucks CEO Howard Shultz took decisive action. He held numerous brainstorming sessions with key employees, and told them to, “break the rules and do things for yourself.” Shultz realized that changes had to be made, and his two-year effort to “transform our business” has put a big smile on shareholders’ faces.
For the aforementioned five reasons, Starbucks SBUX stock shares are likely to remain piping hot for some time. That means now is a great time to pour your portfolio a Grande-sized cup of joe.
Related Articles:
- Starbucks SBUX Frappucinos Could Heat Up Summer Profits (MCD, BKC, YUM)
- Starbucks Focusing on Seattle’s Best Brand (SBUX, MCD, GMCR, PEET, CBOU, BKC)
- Starbucks Bringing Heat Back to the Coffee Wars (SBUX, MCD, GMCR, PEET, CBOU)
Now that the recovery is under way, companies are spending money hand over fist for technology goods and services. And that means big things for these tech stocks. Each one trades for under $10 a share AND is set to double in the next 12 months — get their names here.
