Starbucks (SBUX) was priced at $62 in early April of 2020. Today, the stock is priced well above that number at $108.80. Check out SBUX’s one-year chart, and you will find the stock gradually moved upward after the spring of 2020, hitting $83.56 in early June.
SBUX dipped in the summer, only to rise again in the fall. SBUX has been on a tear since late August, jumping from $77 to its current price of just under $108.91. In short, SBUX has nearly doubled between the spring of 2020 and today.
Is now still a good time to buy SBUX? Let’s find out.
Why SBUX is Generating Investor Attention
SBUX, a coffee and tea specialist, sells its offerings through its Starbucks stores, in supermarkets, in airports, and online. SBUX offerings range from the company’s popular coffee to Seattle’s Best Coffee, Teavana tea, Evolution Fresh juices, and La Boulange bakery products.
Though SBUX is trading a mere $4 away from its 52-week high, the stock’s forward P/E ratio is 38.50, meaning it isn’t too overpriced. SBUX is still growing and implementing tech improvements, primarily through its mobile app, so this forward P/E is not egregiously high.
Though the pandemic hit SBUX particularly hard when it first began, the company pivoted, shifting its focus to drive-thru and carryout sales. In fact, SBUX executives even decided to close down some of its larger stores primarily focused on serving sit-down coffee drinkers, choosing to zero in on on-the-go sales to virus-weary coffee lovers. The shift to grab-and-go services is clearly paying off. SBUX customers rave about the company’s app. This strategic pivot has resulted in SBUX customers spending more money per transaction than before the pandemic.
SBUX’s first-quarter earnings report makes it clear the coffee specialist is back on track following the worst of the pandemic. Though SBUX’s full-year revenue for 2020 declined 11% last year, its fourth-quarter revenue dropped less than 10%. The company’s mobile app accounted for one-quarter of sales in the first quarter of 2021. All in all, the company’s ticket growth increased by nearly 20% in the quarter.
The Analysts’ Take on SBUX
Analysts are optimistic for SBUX. Of the 34 analysts who have issued recommendations for SBUX, eight consider it a Strong Buy, and nine consider it a Buy.
SBUX has a B rating in our POWR Ratings system. The stock has Bs in the Momentum, Quality, and Sentiment components. Click here to find out how SBUX fares in the Value, Growth, and Stability components.
Of the 46 stocks in the Restaurants industry, SBUX is ranked 12th. You can find other top stocks in the industry by clicking here.
Is Now the Optimal Time to Buy?
With more than 33,000 current locations and a plan to have 55,000 operating by 2030, SBUX has the potential to serve more customers than industry titans such as Subway and McDonald’s (MCD). As long as SBUX’s management continues to include drive-thru and carryout sales, the company should continue to excel. The younger generations prefer to get their coffee on-the-go rather than sit down in a traditional restaurant.
Add in the fact that SBUX’s tasty concoctions are quite addictive, and investors have even more reason to scoop up shares of this stock. Though SBUX has been on a tear of late, there is still time to hop on this train.
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SBUX shares fell $0.12 (-0.11%) in after-hours trading Tuesday. Year-to-date, SBUX has gained 3.51%, versus a 5.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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