Starbucks Corporation (NASDAQ:SBUX) has brightened consumer’s days with their caffeinated beverages for over 40 years. And after SBUX stock set an ambitious bar for future growth, it appears as if the consumers of Starbucks coffee aren’t the only ones getting a pick-me-up.
After strong Q1 earnings were reported for fiscal 2015, investors in Starbucks stock are expecting continued strong performance from their favored coffee-chain.
But bears are skeptical growth will meet expectations after SBUX announced food sales would double to an estimated $4 billion by fiscal 2019.
Investors are now asking is Starbucks will find a way to fulfill their projected goals going forward. And though we can’t predict the future, SBUX does indeed seem to a buy on these ambitious growth plans.
SBUX Delivery Service
A greatly anticipated SBUX delivery service will take effect later this year in select metropolitan areas, and could juice sales for the company. Members of the Starbucks loyalty plan will experience the added benefit of their mandatory coffees delivered right to their desk.
This move is part of a long history at Starbucks of focusing on emerging technologies to connect with customers in new ways, including mobile payments. And now that SBUX stock boasts a mobile-payments app which runs some 7 million transactions each week, the arrival of their delivery service will continue to generate an enormous amount of revenue for SBUX.
Starbucks Diversifies Menu Items
SBUX has taken to diversifying their products by promoting more than just coffee. An extra $2 billion from tea revenue is expected to accumulate during the five-year growth plan, and after partnering with La Boulange – a San Francisco bakery famous for their artisanal pastries – food sales have also witnessed a 2% same-store sales growth for the past four consecutive quarters.
Hoping to double their food sales by 2019, SBUX stock is expecting major growth from their diversified products and a rough $1 billion of added revenue from the ultimate Starbucks Evening experience that is bringing alcoholic beverages to select markets.
International Expansion Hopes
Expansion in China and the Asia-Pacific region has positioned SBUX for growth as they plan to double the amount of Chinese stores by 2019, bringing the grand total over 3,000. Starbucks Japan (SBUX first international expansion efforts), will continue to thrive and generate sales, adding to SBUX momentum as they plow into the future.
The Bottom Line
SBUX may have high expectations for the future, but their aggressive plan for innovative growth and their ability to focus on the long-term aspirations of their company make Starbucks stock a solid buy in 2015. There is theoretically competition from other companies like Dunkin Brands Group (NASDAQ:DNKN), but the company behind Dunkin’ Donuts has lost 3% in the last year vs. 23% gains for SBUX stock in the same period.
So when it comes to specialty beverages, Starbucks still reigns supreme.
As of this writing, Anna Rider did not hold a position in any of the aforementioned securities.
