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Starbucks Corporation Message Board

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  • rkim291968 rkim291968 Aug 16, 1999 9:35 PM Flag

    Realelistic answers only!

    Today's SBUX announcement says they would like to
    open
    1000 new stores in Asia by 2003. There are other
    things
    SBUX is doing to grow their revenue. Also, their
    current
    revenue growth rate is still in mid 20's. No
    matter
    how you look at it, SBUX is a good long play.


    Since your SBUX is in 401k which you cannot realize
    until
    you are 59 1/2, holding on to SBUX appears to be a
    good
    move unless you have other money play which you can
    recover
    the SBUX loss.

    My experience says, if you are
    patient with good
    company stocks, they will reward you
    in the long run.
    SBUX currently owns the coffee
    retail market and won't
    go away any time soon. Their
    revenue growth rate is
    still strong.

    So my
    pessimistic estimate, SBUX will hit 25 - 30 in the
    next 12
    - 18 months.

    My optimistic estimate, SBUX
    will hit 25 - 30 in the next
    six months.

    I
    can't see SBUX staying near the teens unless the
    overall
    market crashes - still can happen with Y2k panic selling

    (oops.)

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • rkim291968,

      SBUX can only be considered a
      good investment if it is fairly priced, and if its net
      earnings continue to expand. While its chances may be
      better than many stocks, nothing is
      guaranteed.

      Recently, one of the posters on this board compared
      Starbucks
      to 7-11. While 7-11 is still in business and
      still has great name recognition, its business model
      has been copied by scores of competitors, and it is
      no longer the powerhouse it once was. Starbucks is
      vulnerable in that same way; it cannot be safely assumed
      that they will freely continue to sell coffee at their
      high volumes and high prices without a high-profile
      competitor emerging to check and balance their growth plans.
      Einstein Bagels, a company that produces an outstanding
      product, has thus far failed to succeed in its attempt to
      become the next big coffee thing, but given the natural
      law of the free market,
      somebody will eventually
      be successful in imitating Starbucks on a large
      scale.

      On another subject, I don't believe that negative or
      positive postings have a great impact on stock prices.
      While they may serve to sway the undecided, I believe
      that the mutual fund folks and the seasoned investors
      will stick with earnings reports and the behavior of
      the corporation when making buy/sell decisions.



      Trivia question for all: Name the restaurant which owns
      a huge stake in Einstein Bagels...

      • 3 Replies to bbalgonmori
      • bbalgonmori said
        > somebody will eventually
        be successful in imitating Starbucks on a large
        scale.

        Very true just like all other buisnesses. That is why
        I am
        banking on SBUX's expansion abroad. Anyway,
        as a long,
        I hate to admit but SBUX - like all
        publically trading companies -
        has its risks.


        Note that even after a company is copied, sometimes
        they
        both do well depending on how (un)saturated
        the market is.
        I can think of only one example on
        top of my head: CostCo
        and Price Club which ended
        up merging together later on.

      • I agree if someone comes along and immitates the
        concept, then it will cut into their rich profit margin.
        However with a business like this it will take years for
        someone to build the chain and you will have plenty of
        warning. This is not a high tech software or internet
        business where two guys can come up with the next best
        product in their garage on a shoe string budget out of
        nowhere and challenge the establishemnt. This business
        requires time and capital.
        Of course there are many
        coffee chains that have tried to become like sbux but
        failed. Most of them have a very limited regional
        presence. If you find another chain with similar quality
        and # stores execeeding 500 then it's time to worry.
        The very fact that sbux has expanded so fast is a
        testimony to a great core management that can take the
        company further.

        Of course they have experienced
        growing pain. I have been to many stores where the trash
        cans stay full for hours. Where there is a teenage
        punk in charge and tried to be a wise-ass with
        customers.... But in majority of cases they have done a good
        job managing their growth.

        I don't understand
        their business strategy and I am personally against
        internet investment. Maybe the market reaction will be a
        wake up call to stop f**king around with the
        investor's money and stick to the core business. But I could
        be wrong. Someone suggested to me to invest in AMZN
        when it was $5 and I laughed!

        In conclusion, I
        think the company has a great future. The stock will be
        in this trading range of $20-21 until the Fed news
        next week. This price as in many other stocks has
        factored in 0.25 %increase in the interest rate. If the
        Fed raises the rate by 0.5% then we will probably see
        a $17-18 trading range. And then it won't take long
        before the big money does another rotation and lands on
        SBUX. Good luck to all.

      • 1-sbux model presents very little 'barrier to
        entry'. it is a very low tech. bus. with little expertise
        needed except funding. i am not referring to opening an
        int'l chain but small private outfits. someone here
        once noted that the most popular hangouts in their
        city have become private coffee shops. i can add that
        i have onlt been to one sbux is my city that had
        any room, feel or ambience...there are 800,000 in my
        city. Second Cup has beautiful stores and they are
        always changing the look of new locations to fit the
        times.

        asia and europe are potential at this
        time. again, there will be much greater competition for
        these expansions than there were in US. sbux is on top
        and when you are on top you get recognized and gunned
        for. you cannot compare this thing to macdonalds, 7-11
        or anything else. it is unique.

    • lower then buy more? Remember I have $2500 more in invet in my market account. I would like to see $200-$500 return every six months, but I could be more risky is this the right time for risk?

      • 2 Replies to paytooplay
      • All I am suggesting is, if you bought SBUX at 25
        - 26
        and don't mind 6 month wait for the stock
        to come back,
        play it long. What I hate to see
        people do is take
        the loss now and jump right back
        into another stock
        which may not be a good
        buy.

        Of course, if you can be sure you can take the
        loss
        and make money in other stocks, it's your
        choice.

        What you do with extra money you have now is up to
        you
        because as most of you should know, no one can
        really
        be sure about any particular stock or overall stock

        market trend in short term.

        If I were you, I will
        put the money in the market
        leading companies and
        get ready to play long.

        My 2 cents.

      • www.justquotes.com/

        enter sbux for research
        there's a nice selection to choose from
        including annual report and insider trading
        (the latest posting for the latter is 6/1/99)

 
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