Posts Tagged ‘sbux’

  • Starbucks Tumbles
    , July 31st, 2012 at 3:56 pm

    In May, I listed 13 stocks to avoid. Recently, Chipotle ($CMG) got slammed and now another one on the list has been trapped by the bears. This time it’s Starbucks ($SBUX). Last week, the company’s earnings missed expectations and guidance was poor. Wall Street had been expecting 2013 EPS of $2.28. Starbucks said it will only be as high as $2.14.

    The stock got slammed for a 9% loss on Friday. It dropped another 1% yesterday and three more percent today. Starbucks is down more than 17% since I first put it on my stocks to avoid list 11 weeks ago. Netflix ($NFLX) is down more than 26% and Chipotle is off by 28%.

  • 13 Stocks to Avoid
    , May 14th, 2012 at 10:58 am

    Here’s a list of 13 stocks that are way, way, WAY overpriced. I listed Friday’s closing price with each stock.

    Amazon ($AMZN), $227.68

    Motorola Mobility ($MMI), $39.23 (getting bought by Google) ($CRM), $137.78

    Netflix ($NFLX), $77.38

    Coke ($KO), $77.47

    Whole Foods ($WFM), $88.54

    Costco ($COST), $84.60

    Stericycle ($SRCL), $83.24

    Starbucks ($SBUX), $55.01

    Nike ($NKE), $108.26

    Ariba ($ARBA), $39.17

    Chipotle ($CMG), $408.25

    Intuitive Surgical ($ISRG), $558.95

  • Don’t Invest From 40,000 Feet
    , April 19th, 2012 at 9:49 am

    I read a lot of investment advice on and off the web. One of the mistakes I often see is that investors try to invest from 40,000 feet above their targets. By this, I mean they pay far too much attention to things like politics, seasonal effects or the Federal Reserve.

    I hear people say things like, “I want to hold off investing right now until I see how the election turns out.” I’m never sure what that means exactly. Or they say, “I’d never investment now, not with Helicopter Ben in charge!”

    I realize this sounds like heresy, but the Fed’s role in the movement of stocks is far, far over-rated. What’s more important is earnings and (to a lesser extent) valuations.

    Look at McDonald’s ($MCD). The stock has done very well over the last ten years because its profits have done well. Yahoo‘s ($YHOO) profits haven’t well and the stock has suffered. Sure, there are exceptions, but those are the minority. Valuations, of course, do matter. Overall profits have increased while the market has done poorly.

    Don’t mistake what I’m saying: Monetary policy is important, but even if you knew exactly what the Fed was going to do, that should barely impact your investments. Most investors would be much better off if they ignored all the news about the Fed or politics. People need to believe that someone is in control of the market, and that someone must be in Washington. I hate to break it to you, but they’re not running the market.

    I also hear people say that sure, the market is up over the last three years, but that’s only because it’s been boosted by the Fed. They often say this as if the profits somehow don’t count. Don’t look for confirmation of your political views in the stock market (this is known as the “Larry Kudlow Effect”).

    Since the beginning of 2009, Lowe’s ($LOW) is up about 40% while Home Depot ($HD) is up about 110%. Investors would do themselves a lot more good thinking about how two companies that are so similar can perform so differently or why Starbucks ($SBUX) went from $40 to $10 and is now over $60. What happened there? Google ($GOOG) gets tons of attention but its stock hasn’t outperformed the market over the past few years. Danaher ($DHR) gets almost no attention yet the stock keeps powering higher (even this morning, the AP calls the company a “health care conglomerate“). I don’t think that’s due to Ben Bernanke.

    Ignore the large-scale stuff—anything where it’s easy to have a canned opinion (Obama, Bernanke, Romney). Instead, focus on low level things like one particular company’s sales, earnings and debt.

  • Starbucks Is Overpriced at $45
    , January 3rd, 2012 at 1:30 pm

    I like Starbucks ($SBUX) a lot but I’m afraid the stock has run well past a fair price. The shares closed the year at $46.01 which is 30 times trailing earnings and 25 times the estimate for future earnings. Starbucks is good, but not that good.

    The chart below shows SBUX over the last three years along with its P/E Ratio and trailing earnings. Right now, I’d say that a fair price is about $35. By that I mean $35 is fair, not a bargain.

    The company said today that it will be raising prices. Earlier, Starbucks had said that higher commodity prices will take 21 cents per share off its earnings for this fiscal year.

    (To be fair, I completely missed the great buying opportunity three years ago.)

  • Inside the Secret World of an Apple Store
    , June 20th, 2011 at 11:36 am

    This is embarrassing to admit, but I’ve completely fallen for the Apple ($AAPL) cult. Worst of all, it happened precisely by their design. It started with an iPod as a present. From there, I got a Shuffle, then a MacBook and then an iPhone.

    These items have somehow placed themselves squarely in my daily routine and now it’s hard to think what life was like before I had them. I’ve gone to Apple’s ultra modern-looking store in Georgetown several times and the young folks there have been remarkably professional.

    Today’s WSJ takes a fascinating look at the Apple stores:

    More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple’s annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That’s far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates.

    With their airy interiors and attractive lighting, Apple’s stores project a carefree and casual atmosphere. Yet Apple keeps a tight lid on how they operate. Employees are ordered to not discuss rumors about products, technicians are forbidden from prematurely acknowledging widespread glitches and anyone caught writing about the Cupertino, Calif., company on the Internet is fired, according to current and former employees.

    I find it interesting that Apple has laid out its stores on the “shopping experience” instead of just being a warehouse of goods. Even though the stores are airy, every part of an Apple store is specifically designed to help the customer.

    I think it’s fascinating that aesthetics play such a key role in how customers make their decisions. This, of course, is nothing new. Starbucks ($SBUX) realized this lesson years ago. People don’t just buy coffee. They go for the coffee experience (great brand name, btw).