Starbucks Looks Very Attractive

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

Starbucks' share price has fallen as the company gave a cloudy outlook for the near future. That drop is making the company look like an attractive investment. There's no doubt that Starbucks is a quality company. And Howard Schultz has great plans for the future, such as tea; juices and smoothies; single-servings; and food. That's good because Starbucks can't stand still. McDonald's and Dunkin' Donuts want customers to come to their stores. Green Mountain Coffee doesn't want to give up too much of the single-serve market. And Monster Beverage wants to battle for those beverage dollars. Right now, Starbucks trades at 25 times earnings. That's not an unreasonable multiple given Starbucks' quality and growth prospects. John and David would prefer a lower price, but shares look pretty attractive today.

Green Mountain Coffee has had quite a year, to say the least. You can find more in-depth analysis on Green Mountain Coffee Roasters in our new premium report. In it you'll find everything you need to know about the company, including whether it's a buy at today's prices. Click here for instant access

David Meier and John Reeves have no positions in the stocks mentioned above. The Motley Fool owns shares of McDonald's and Starbucks and has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters and short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters. Motley Fool newsletter services recommend Green Mountain Coffee Roasters, McDonald's, Monster Beverage, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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