Everyone’s favorite coffee shop
Starbucks Corporation (NASDAQ:SBUX) is on every corner in America and continues to expand globally. No other company has had the impact on coffee culture like Starbucks Corporation (NASDAQ:SBUX). For many, Starbucks Corporation (NASDAQ:SBUX) has become an addiction and more than a daily trip. To appeal to its customers, Starbucks Corporation (NASDAQ:SBUX) has expanded its menu beyond coffee to offer teas, pastries and sandwiches as well.
In the most recent quarter, global comparable stores sales grew 6%. This marked the 13th consecutive quarter of 5% or greater in comparable store sales. Total revenue grew 11% to a record $3.6 billion. Operating margins rose 180 basis points to a record 15.3%.
Looking forward, Starbucks Corporation (NASDAQ:SBUX) has been, and continues to be, a phenomenal growth story. The company plans to open at least 3,000 new stores in the Americas in the next five years. Half of them will be in the U.S. By the end of 2013, Starbucks will have 4,000 stores in the Asia-Pacific region. By next year, China will be the company’s second largest market after the U.S. and will have more than 1,500 stores by 2015. There are now over 2 million My Starbucks Rewards cards that have been sold in China. Starbucks will also increase its presence in Indonesia, the Philippines and Vietnam.
Starbucks is also looking to grow after the closing of its acquisition of Teavana. The tea market is $40 billion globall,y and Starbucks wants to do for tea what it did for coffee. This is particularly appealing for China where the majority of consumers still drink tea over coffee.
With the growth plans Starbucks has, the company remains attractive at a forward P/E of 25. The company has only $549 million in debt and free cash flow last year was $1.25 billion. The annual dividend is $0.84 per share for a yield of 1.2%. The dividend payout ratio is only 39% and I see the dividend payout increasing.
Foolish assessment
Buying what you know works with where you go every morning as part of your daily routine. Chances are the stock can be a great investment. For Einstein Noah, the stock hasn’t done much in the past few years, but I think that’s about to change and David Einhorn is looking for a return on his investment. For Dunkin Brands Group Inc (NASDAQ:DNKN) and Starbucks, both have more room for growth and an investor can’t go wrong owning either one.
The article Your Quick Stop in the Morning Should Be in Your Portfolio originally appeared on Fool.com and is written by Mark Yagalla.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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