3 Reasons to Own Starbucks Stock

When does it stop? Starbucks (NASDAQ: SBUX  ) stock just keeps soaring. Shareholders holding the stock over the past five years boast a 300% gain, trouncing the Dow Jones' paltry 32% increase in the same period.

Is it too late to jump in? Definitely not. Here are three reasons Starbucks stock is worth owning.

Economies of scale
The company has more than 11,100 Starbucks-branded locations in the U.S. alone. Comparatively, Dunkin' Donuts (NASDAQ: DNKN  ) and Caribou Coffee have 7,200 and 600 points of distribution, respectively.

If the story ended here, Starbucks would already have a large enough lead on competitors for obvious scale advantages. But in the international markets, Starbucks' story gets even better. While Dunkin' Donuts' 3,100 locations outside the U.S. in 30 countries is impressive, Starbucks is far ahead. It has 7,000 stores in 60 countries.

Store growth
Starbucks added 590 net new stores globally in just one quarter. Though 337 of those were Teavana stores, the company still added 253 Starbucks locations in its second quarter of 2013. Comparatively, Dunkin' Donuts added just 108 net new locations in its most recent quarter.

Starbucks' potential in the China/Asia-Pacific region alone will provide substantial growth drivers for Starbucks stock. In China, the company plans to grow its 2012 footprint of 700 stores to 1,500 by the end of 2015. This year alone, it plans to open 600 net new stores in the China/Asia-Pacific region.

Food
"Responding to customer demand for more wholesome and delicious food options," explained a June 4 press release, Starbucks acquired La Boulange in 2012.

The goal? To "bring the artistry of the French bakery to the marketplace in a similar way that Starbucks brought the romance of the Italian espresso bar to many North American coffee consumers for the first time," described the press release from Starbucks announcing the acquisition.

Now, with the help of La Boulange's renowned French baker Pascal Rigo, Starbucks wants to shake things up with food, too. Sounds ambitious? It is.

Yet Fool contributor Demitrios Kalogeropoulos thinks that Starbucks' Food expansion is its most important growth driver. He thinks the addition of food can "double-check averages over time" and boost same-store sales growth.

Is there upside left to Starbucks stock?
Starbucks' growth era is far from over. Sure, 33 times earnings is a high price to pay, but the company looks poised to deliver over the long haul.

Now more than ever, it's essential to take control of your investments if you want to have a financially secure retirement. The Fool wants to help you retire rich, so we've put together a research report with three promising stocks specifically chosen with long-term retirement investors in mind. Don't miss out on this absolutely free report; click here and get your copy today!
 
Editor's note: A previous version of this article misstated the number of company-owned U.S. locations and the number of additional locations planned in China. The Fool regrets the error.

Read/Post Comments (0) | Recommend This Article (2)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2515761, ~/Articles/ArticleHandler.aspx, 10/20/2014 5:35:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement