Consumer Discretionary Stocks to Buy — Hotels, Restaurants & Leisure
The choice here comes down to Chipotle Mexican Grill (CMG) and Starbucks (SBUX). Of the two, CMG stock is definitely doing better in 2014, up 4.2% year-to-date through April 4, almost 13 percentage points higher than SBUX. However, when I consider Starbucks’ business model, I have to go with the world’s largest coffee retailer.
CEO Howard Schultz appeared on CNBC back in January after Starbucks released its Q1 fiscal 2014 highlights. Schultz was very upbeat about SBUX stock and the company’s future. Although Starbucks’ same-store sales growth of 5% came in below expectations, Schultz reminded viewers that e-commerce has changed the way retailers should be judged by investors.
The emphasis on social media and technology to engage customers is something that Starbucks does very well. I’m a frequent visitor to its shops. Its loyalty program, while giving me many free coffees over time, has likely also led me to spend more than I otherwise would have. And that’s okay, because it’s one of my only indulgences in life.
Beyond what Schultz has said, I’m most excited about its move to serve beer and wine in thousands of stores across the country. Starbucks Evenings (4 p.m. to close) will allow the company to produce meaningful revenue from the slowest part of its day while still maintaining a cafe atmosphere.
The revenues generated by Starbucks Evenings will dramatically increase the four-wall contribution by each participating which in turn will have a tremendous impact on future profitability. Of the three consumer discretionary stocks to buy described herein, SBUX stock is the most intriguing over the long haul.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.