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Why this portfolio manager is calling Starbucks ‘a home run’

Talking Numbers

Shares of Starbucks were down Tuesday but a portfolio manager and a strategist say that it's a buying opportunity.

A lot of caffeine and cheaper input prices weren't enough to save Starbucks' stock on Tuesday.

Sales of the coffee giant dropped more than 2.5% after ITG Investment Research said the company's momentum appears to be slowing this quarter. Within just 15 minutes of the market's open, 2.5 million shares of the café chain changed hands. That's a lot for the stock given is 30-day average daily volume of 4.6 million shares.

Still, this has been a very good year for Starbucks. Despite Tuesday's selloff, the stock is up nearly 45% year-to-date. And, in the last five years, Starbucks has gained 714%.

(Read: Starbucks stock drops after report questions momentum)

On CNBC's Street Signs' Talking Numbers segment, First Asset Investment Management portfolio manager John Stephenson says the ITG report meant nothing; he adamantly insists Starbucks is still a buy.

"This is one stock you need to own," says Stephenson. "Yes, it's had a great run. And, it's simply profit-taking today. If you look at this company, it's hitting on all cylinders. Same-store growth I'm modeling at 6%. But, then you look at revenues growing at 10%, that translates into earnings growth of 20%. That's phenomenal. McDonald's would kill for growth like that."

Stephenson also cites lower coffee prices as being a tailwind for the company. Since the start of 2014, coffee bean prices are down 23%. They are now half of what they were two years ago.

As well, Stephenson is enthusiastic about the company pushing into licensing stores versus direct ownership. "The profitability and the margins of a licensed store are 30% versus 13%" for a directly owned store, says Stephenson. "This is a home run."

(Read: Starbucks $450 holiday gift cards sell out in a flash)

Talking Numbers contributor Richard Ross is also bullish on Starbucks. Though it broke below its one-year trend channel and the 50-day moving average on Tuesday, Ross says, "That a reason for pause, not for panic."

For Ross, the charts are extremely positive. "It doesn't get any better than this," says Ross. "You want to be a buyer on weakness."

To see the rest of Stephenson's fundamental analysis and Ross' two charts on Starbucks, watch the video above.

More from Talking Number:

BofA Merrill Lynch: Prepare for a 20% correction next year
How China’s economy is choking on smog
Why even McDonald’s investors are feeling sluggish

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