Time to finally start buying Starbucks again?
Seems like the stock has bottomed out and is building a base -- time to go long?
Best Answer
211 points
MichaelShulman answered 3 months ago …
I wouldn't.
One of the first things that consumers are cutting back on is spending money in restaurants. In fact, 73% of Americans think that Starbucks is overpriced.
With more people using credit cards to pay for gasoline and food, credit card and home equity line defaults are rising rapidly, retailers are reducing forecasts across the board and most restaurant chains say they are facing their toughest business conditions ever.
I've got a fair number of put options in restaurants and retailers on my ChangeWave Shorts list, including Starbucks.
Answers
3127 points
EthanR answered 3 months ago …
The point and figure chart has a bullish price objective of 22.50, and all the technical indicators that I use look positive. Stock is up nicely today. I do see some possible resistance at the 200 day M.A., right now at 17.89. But if nothing else, I think you have a nice trade. Just don't spend all your profits on $5 Cappachino!
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118 points
HardOpinion answered 3 months ago …
May be too soon!
Why - many of the store closures announced are slow to happen and some may never happen because as many commercial property owners struggle with rising vacancy levels, they are are going to do everything possible to ensure that breaking a lease contract is difficult. SBUX is faced with this problem. Why question is which dumb ass announced closures BEFORE checking out the leases? or was this a case of "we're Starbucks so we wont have a problem"!
If closures are delayed and/or lease breaking comes at a price, then SBUX will carrying unexpected costs which will be a drain on the bottom line over time. It'll be interesting to see how these costs get whitewashed through creative accounting.
Watch to see what articles appear from the big Starbucks managers conference in New Orleans at the end of October. Will the store managers leave feeling revitalized or even more depressed that bonus earnings continue to be out of reach for most and although contracted to work 40 hours per week will still be expected to work what ever it takes - 60-70-100 hours per week!
For me, the company still has a lot of things to fix internally. Sentiment and a general upturn in the markets should not be sufficient to make this stock rise. Take a hard look at the "real" company not just the froth on your latte!
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