Krispy Kreme Doughnuts (KKD), Dunkin Brands Group Inc (DNKN), Starbucks Corporation (SBUX): Consumers Still Like Their Comfort Food

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Starbucks: Setting records and increasing estimates

Investors in Starbucks Corporation (NASDAQ:SBUX) have to be pleased with the company’s performance of late. On April 25, the company announced second-quarter (fiscal year end Sept. 31) revenue of $3.6 billion. This represented an 11% increase from Q2 of last year. Meanwhile, same-store sales grew 6%, traffic increased 4%, and the average ticket was up 2%.
I’ve been very impressed with the way the company has been able to boost traffic despite raising prices on some of its signature items. The combined increase in both of these measures demonstrates both loyalty, and the underlying willingness of the global consumer to spend discretionary income.
This year, analysts expect the company to earn $2.18 per share, followed by $2.63 per share in fiscal 2014. This represents expected 20% growth from 2013 to 2014. Similar to Dunkin Brands Group Inc (NASDAQ:DNKN), this growth is particularly impressive given Starbucks Corporation (NASDAQ:SBUX) near $15 billion annual revenue base.
Shares of Starbucks Corporation (NASDAQ:SBUX) offer a dividend yield of 1.3%, and the company has a policy of periodically raising it’s dividend rate. Given the company’s $3.8 billion in current assets, I wouldn’t be surprised to see the dividend payment increase in the next two quarters.

As the US employment rate slowly improves, discretionary spending is picking up. All three of these “comfort food” companies are aggressively expanding (both domestically and internationally).
Investors should realize strong, reliable profits on these stocks as the US economy continues to improve, and the global economy shows pockets of strength. Consider adding these stocks to your portfolio today, given the potential for bullish reports over the next few quarters.
The article Consumers Still Like Their Comfort Food originally appeared on and is written by Zachary Scheidt.

Zachary Scheidt has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Zachary 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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