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Dumb Starbucks, Smart Starbucks

By Mark Reeth and Michael Finarelli – Feb 11, 2014 at 3:00PM

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Turns out Starbucks can be the butt of a little joke, and still bring home strong results for investors.

Starbucks (SBUX -1.88%) received some unusual media attention at the opening of a parody store, Dumb Starbucks, in L.A. this week, as one comedian's promotion for a show on Comedy Central. While the publicity stunt attracted throngs of people to witness the joke and enjoy free coffee, it did little to affect the momentum of the company, which brought home very strong results for investors over the holiday quarter.

In an atmosphere in which many retailers are complaining of a decline in foot traffic at the moment, this isn't the case for Starbucks, which saw strength not only in its core U.S. market but in the Asia-Pacific and European markets as well. And, whereas the paradigm shift toward e-tail is impacting many brick-and-mortar retailers negatively at the moment, Starbucks seems largely unaffected by the trend.

In this video, Motley Fool analyst Mike Finarelli talks with host Mark Reeth about Starbucks' prospects going forward, and says he's a buyer at today's prices. The company may seem a little pricey (after normalizing its currently skewed-looking P/E ratio to account for its settlement with Kraft), but Mike still sees an enormous potential for growth here. Not just with the new stores it plans to open as the company expands further in China and the broader Asia-Pacific region, but he also sees a number of levers the company has at its disposal that can continue to drive healthy same-store sales growth for its existing stores. He expects investors will continue to see robust growth with Starbucks for years to come.

Mark Reeth and Michael Finarelli have no position in any stocks mentioned. The Motley Fool recommends and owns shares of Starbucks. 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.

Stocks Mentioned

Starbucks Stock Quote
Starbucks
SBUX
$101.79 (-1.88%) $-1.95

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