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Starbucks' (Nasdaq: SBUX  ) beautiful green and white siren tempts you -- she calls out to you to take a moment to enjoy a rich, delicious cup of coffee. And once you enter a Starbucks, the aroma of fresh-brewed coffee, the comfortable couches, the pleasant service, and the artful architecture help lull you into staying a while. When I first purchased shares in Starbucks, I intended to hold them for years, and my conviction has only grown since then. And now, much like that beautiful siren, the recent pullback in Starbucks' stock price is enticing me to take another sip of the coffee titan's shares.

Enter the Verismo
I continue to believe that many investors are underestimating the potential of the Verismo, Starbucks' recently launched at-home espresso machine. CEO Howard Schultz is unleashing a massive marketing campaign for the ultra-sleek device that should allow Starbucks to gain a beachhead in the $8 billion at-home single-cup brewing market -- which grew 143% last year in the United States -- and further cement its Tier 1 status when it comes to delicious coffee, in Starbucks' iconic cafes and now within people's homes.

Massive emerging-market opportunities
While Starbucks is arguably approaching store-count saturation within the U.S., it's far from reaching its global potential. In fact, the U.S. accounted for almost 65% of Starbucks' worldwide stores at the end of fiscal 2011. Yet the company's fastest-growing geographic region is China/Asia Pacific, where revenues grew 31% last quarter, thanks to an impressive 12% jolt in same-store sales. Starbucks' beloved brand is meeting with a warm welcome in the region, and management plans to seize the opportunity by increasing its store count there to 1,500 by 2015 from fewer than 500 at the end of fiscal 2011.

Starbucks also just recently opened its first cafe in India in a joint venture with Tata Global Beverages and plans to open 50 stores by the end of this year. While tea consumption far surpasses coffee consumption in India, drinking coffee is becoming increasingly popular. The Wall Street Journal reports that consumption of coffee in India rose to an estimated 108,000 metric tons in 2010, up 80% in the past decade, according to government figures.

Considering China's and India's massive populations, the fact that coffee drinking is still in its nascent stage in these regions, and Starbucks minimal store counts in these countries, it's clear to me that Asia will be a powerful growth opportunity for Starbucks for years to come.

Quality at a fair price
Today's prices are giving us the chance to buy Starbucks around the same levels of Tier 1's initial purchase, even though the Starbucks story has improved since then due to the reasons I mentioned earlier. Still, at about 21 times analysts' expectations for 2013 earnings, Starbucks' stock might not scream bargain, but I'm willing to pay for quality. Risks remain; economic turmoil in Europe will likely weigh on Starbucks' profits for some time, but I'm willing to accept that risk in order to further build out Tier 1's stake in this premier global brand. And so 24 hours after this article is published, I will be buying more shares of Starbucks in the Tier 1 portfolio.

And if you're wondering about how Starbucks' entry into the at-home single-serve brewing market will impact current market leader Green Mountain Coffee Roasters  (Nasdaq: GMCR  ) , be sure to check out our new premium research report. With Green Mountain as cheap as it's ever been, many investors are wondering whether this is the end of the former market darling, or the perfect entry point for an enormous rebound. In our report, you'll find everything you need to know about Green Mountain, including whether it's a buy at today's prices. Click here for instant access.

Joe Tenebruso has no positions in the stocks mentioned above. The Motley Fool owns shares of Starbucks and has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters, short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters, and short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend Green Mountain Coffee Roasters 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.

Read/Post Comments (5) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 01, 2012, at 11:00 AM, CapitalIC wrote:

    I just returned a Verismo machine to the store. We found the coffee thin, too sharp on the top notes without the body and not hot enough. There was no way to adjust volume or temperature on the Verismo. I was disappointed with their new offering especially with their brewed coffee pods and I am a huge Starbucks coffee drinker. It could have replaced my usual at home coffee habits at a higher ring per cup devoted solely to the SB brand if it had delivered on quality coffee. I really wanted to like it. BC

  • Report this Comment On November 03, 2012, at 11:01 AM, DellSpa wrote:

    At $1.00 a pod I find Verismo too expensive. Verismo adds little to the net value of Starbucks stock.

  • Report this Comment On November 03, 2012, at 6:29 PM, CromulentBrad wrote:

    thanks to overseas expansion, starbucks could double or even triple their number of stores. people forget that china and india both have THREE TIMES the population of america, each with a rapidly expanding middle class.

    here at home, they're slowly moving into tea and smoothies. they just bought a bakery, which probably means they're going to expand their food offerings (look out panera). the growth story for one of america's most beloved companies is far from over.

    in 10 years, they will be a dividend aristocrat, mentioned in the same breath as mcdonalds, coke & p&g.

    p.s. i don't drink coffee, but i am buying what starbucks stock is selling.

  • Report this Comment On November 05, 2012, at 9:29 AM, plug555 wrote:

    I am on board with the international expansion opportunities, but is anyone else worried that the Verismo at home business will cannibalize their in-store sales?

  • Report this Comment On November 05, 2012, at 10:48 PM, LifeDaddy wrote:

    I find the comments made by other readers regarding the quality of the coffee produced by the Verismo system to be misplaced. Regardless of whether one likes the Verismo system or one doesn't even drink coffee (like myself), that does not make SBUX a stock to avoid. SBUX is a buy if the international growth potential in India, China and throughout SE Asia comes to fruition. Understandably, SBUX has to grow not only through more distribution points (stores), but also by slowly overcoming the cultural preference for tea versus coffee and by integrating tea into the offerings to attract clientele.

    Also, it is shortsighted to think that SBUX will not further develop the quality of the coffee produced by the Verismo system. Although SBUX is not a high tech company like Intel, et al, shouldn't we expect a measure of technological advancement of a system that the company is placing a substantial financial commitment behind?

    Although I will not go buy SBUX tomorrow, it is certainly on my short list of companies to consider in the near-term future.

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