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Starbucks, Watered Down

Starbucks' (Nasdaq: SBUX  ) big claim to fame may be caffeine, beans, and a variety of flavors, even chocolate, but yesterday, the company announced that it's buying a bottled water company called Ethos.

Terms of the deal weren't disclosed, although Starbucks said that its purchase won't impact earnings. However, as was pointed out yesterday on our Starbucks discussion board, Ethos' do-good philosophy (it contributes a portion of proceeds to clean water efforts in developing countries) hardly seems an accident. Starbucks has always marketed itself heavily on social responsibility -- despite the fact that one socially responsible mutual fund recently demoted Starbucks from its list over an alcoholic beverage.

It's not clear just how much buying the bottled watered company will do for Starbucks' bottom line -- although it certainly supports Starbucks' mission and branding. However, Starbucks does sell $25 million worth of bottled water annually, which isn't exactly chump change, so it's good to have Ethos in the fold. (No more Crystal Geyser, for those of you who have ever picked up that brand of water at your neighborhood Starbucks.)

Starbucks shareholders -- or those who are watching Starbucks -- surely haven't missed a certain degree of malaise surrounding the stock in recent times. Its difficult comparisons to last year's same-store sales have led to a few reports that have caused some to wonder if Starbucks' growth is stunted -- and others, like myself, to think there's no reason to sweat the short term when the company is still within its 3% to 7% goal for monthly same-store sales increases. In the duration, though, Starbucks' share price is approaching levels that some have called downright attractive.

If Starbucks is taking the lemons and making some kind of iced tea lemonade concoction, it seems a perfectly good time to do so. It's still got plenty of plans -- like its musical endeavors, decadent desserts, and hot breakfasts.

For a solid company like Starbucks, recent machinations in stock price likely shouldn't give long-term investors too much cause for concern, although sometimes the hardest thing for an investor to do is to ignore negative sentiment. In the meantime, it's obvious Starbucks is just going to keep ticking along.

What do you think of Starbucks' current stock price? Are Starbucks' days of heated growth behind it? Take a break and talk to other Fools on our Starbucks discussion board.

Alyce Lomax does not own shares of Starbucks.

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10/26/2016 1:03 PM
SBUX $53.82 Up +0.15 +0.27%
Starbucks CAPS Rating: ****