Buying Starbucks Today Is Like Buying Coke in the '80s

Warren Buffett first invested in Coca-Cola (NYSE: KO  ) in 1988 for a simple reason. While Coke was already a universal brand in North America and parts of Europe, it had yet to fully reach its potential internationally, particularly in emerging markets. In the years after Buffett's purchase, Coke went on to be a huge winner for Berkshire Hathaway (NYSE: BRK-B  ) , racking up multibagger returns.

Matt sees the same potential in Starbucks (Nasdaq: SBUX  ) ,whose addictive products and ubiquitous stores have yet to meet their full worldwide potential, including in markets like China, where Starbucks expects to triple its store count over the next few years. Could investing in Starbucks today deliver the same kind of returns that Buffett enjoyed with Coke? Watch today’s video to get Matt's full take.

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Matthew Argersinger owns shares of Berkshire Hathaway and Starbucks and has the following options: long JAN 2014 $80 calls on Berkshire Hathaway and short JAN 2013 $48 puts on Starbucks. The Motley Fool owns shares of Berkshire Hathaway, McDonald's, and Starbucks and has the following options: short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend Berkshire Hathaway, McDonald's, Starbucks, and The Coca-Cola Company. 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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  • Report this Comment On October 20, 2012, at 1:33 PM, itgal wrote:

    I still see Starbuck's as a long-term win but that's not to say I am happy with my unrealized 15% loss since purchasing shares in May.

  • Report this Comment On October 28, 2012, at 9:35 PM, anuvaka wrote:

    I can't see how you can consider Starbucks becoming anything the size of Coke (or Pepsi)

    SBUX has to buy or rent/refurbish a store front before the first sale and KO has only to deliver to a new store.

    Expanding into Europe or China would be equally slow and have to appeal to a different culture. With a different product mix.

    And you also think they can compete with GMCR?

    I think this an under thought investment.

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