3 Reasons to Buy Starbucks Stock

Americans love their coffee, and there's no company that's made that fact more apparent than Starbucks (NASDAQ: SBUX  ) . The company operates or licenses 1,300 stores in the Americas region, with a total operation of almost 19,000 locations worldwide. Cafe success has made Starbucks a fantastic stock over the last few years, with shares up 24% over the last 12 months and 275% over the last five years.

Even with all that growth -- and a P/E that's grown to almost 33 -- Starbucks still has a lot to offer investors. The three reasons I want to focus on today are the company's plans for expansion, its food offerings, and the continued growth of single-serve home brewing. Combined, they make an impressive case for this impressive brand.

Continued expansion
A chicken in every pot and a Starbucks on every corner -- the American dream. Even with its huge base, Starbucks is still planning to add another 1,300 locations around the globe this year. And that's just locations under the Starbucks brand. Teavana will contribute another 350 locations, which includes 337 that were acquired when the company was purchased at the start of the year.

The push for more real estate is partially a push toward drive-thru capability. On the company's last earnings call, Americas president Cliff Burrows said that the company's "drive-thru stores have healthy profit margins as [it's] able to better leverage fixed occupancy costs and depreciation with sales coming from both out of the window and in the cafe." 

Additional drive-thru locations should help Starbucks continue to compete with McDonalds' (NYSE: MCD  ) McCafe line, which has been generating lots of good news for the burger chain. McDonald's recently announced that it was hiring 2,000 baristas for its operations in China, and increasing the number of McCafe locations by 45% over the course of 2013. More drive-thru locations should help Starbucks compete with the fast-food giant in the U.S..

New food offerings
On top of its new locations, Starbucks has been increasing its food offerings. The La Boulange bakery brand that Starbucks purchased last year is now in over 425 locations, and the company is going to expand on that throughout 2013. Starbucks has called food one of the "near and long-term growth [drivers] for the Americas."

Along with helping it compete with the aforementioned McDonald's, food is really going to help Starbucks fight the Panera Bread (NASDAQ: PNRA  ) threat. Panera has seen fantastic growth recently, with revenue up 13% and comparable sales growing 3% last quarter. One of the chain's biggest draws is the combination of food and coffee, which has been lacking at Starbucks. An increase in food offerings could help Starbucks hold on to customers that it would have otherwise lost to Panera for lunch.

Single-serve coffee continues to impress
After almost six months of hype, the Starbucks Verismo system -- a response to Green Mountain Coffee Roasters'  (NASDAQ: GMCR  ) Keurig machine -- hit the market and made only a mediocre impact. While Starbucks' system is fine, Green Mountain still easily holds the single-serve crown. Starbucks recognized that fact, and reupped its commitment to make pods for the Keurig earlier this month.

The partnership has been lucrative for both companies, and its continuation -- for five years at a minimum -- is great news for investors on both sides of the agreement. For Starbucks it means that the company doesn't have to focus all of its energy on its Verismo system, content in the knowledge that it can sell coffee through the wildly popular K-Cup format.

The combination of these three factors should help investors sleep soundly, and should keep competitors up all night. The long run looks great for Starbucks, and I'll be watching for new moves throughout the year, as these three points don't cover all of the great things happening at the company.

A closer look at Panera
Investors can be forgiven for thinking that a company that has returned almost 2,500% since going public probably has its best days behind it. But in the case of Panera Bread, there's reason to believe that the best is still yet to come. The stock has been on an absolute tear over the past five years, and you're invited to find out why -- and what else there is to look forward to -- in The Motley Fool's premium report on Panera. Included are key areas that investors must watch, as well as opportunities and threats facing the company both today and in the long term. Don't miss out on this invaluable investor's resource -- simply click here now to claim your copy today.


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