4. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 61
Starbucks Corporation (NASDAQ:SBUX) functions globally as a roaster, marketer, and seller of specialty coffee. The corporation has three main segments – North America, International, and Channel Development. It is one of the premier consumer discretionary stocks to invest in. In Q1 fiscal 2023, Starbucks Corporation (NASDAQ:SBUX) resumed its share repurchase program, repurchasing 1.9 million shares of common stock worth $191.4 million. Approximately 50.6 million shares remain available for purchase under the current authorization.
On February 15, BMO Capital analyst Andrew Strelzik raised the firm’s price target on Starbucks Corporation (NASDAQ:SBUX) to $125 from $120 and kept an Outperform rating on the shares. According to BMO’s research, Starbucks Corporation (NASDAQ:SBUX)’s overlap of stores in the U.S. has remained relatively stable, with 2021 seeing near multi-year lows. This has increased confidence that the company will continue to experience strong comparable sales growth in the U.S. and suggests a shift towards more gradual, less competitive U.S. store expansion. In a research note to investors, the analyst stated that BMO remains optimistic about the stock and anticipates that Starbucks Corporation (NASDAQ:SBUX)’s strength in the U.S., along with margin recovery and eventual acceleration in China, will lead to further upside potential.
According to Insider Monkey’s fourth quarter database, 61 hedge funds were long Starbucks Corporation (NASDAQ:SBUX), compared to 54 funds in the prior quarter. Ray Dalio’s Bridgewater Associates is a prominent stakeholder of the company, with 2.6 million shares worth $259 million.
Polen Global Growth Strategy made the following comment about Starbucks Corporation (NASDAQ:SBUX) in its Q4 2022 investor letter:
“We also liquidated our remaining position in Starbucks Corporation (NASDAQ:SBUX). While the company remains a unique and resilient franchise, China is a very important growth market for the company, and zero-COVID policies have made it challenging for the company to operate in this important market. While we expect China to return to more “normal” operation at some point, any COVID flare-ups, in China or other markets, present a very real headwind to Starbucks’ profitability. L’Oreal, Estée Lauder, and other holdings continue to have meaningful exposure to China, but in each of these cases, our research indicates they’re able to better adapt to these operating challenges and realize the growth opportunity in China through their online businesses. In short, we think there are better risk-reward opportunities.”
