Over the past decade or so, Starbucks Corporation (SBUX) has become far more than just a place to pick up a cup of Joe.
It has transformed the civilized European cafe concept and added an expressly American twist. By that, I mean management found a concept it could market and mass produce both in the U.S. as well as across the world.
The company’s newest foray is Italy. Yes, SBUX is entering the heart of the coffee drinking world to see how it fares in an espresso-fueled country with its West Coast roasting style.
Starbucks currently has more than 23,000 stores worldwide, and about 12,500 of those are in the U.S., according to statistics portal Statista.com. Canada, China, Japan and the UK round out the top five countries for SBUX.
Starbucks Might Struggle In Europe
Starbucks’ exposure to Europe isn’t really the biggest opportunity for SBUX stock today. Europe’s economy is hardly conscious, and spending up for the American cafe experience isn’t really necessary on a continent whose citizens don’t have much disposable income at the moment.
Plus, there’s a certain danger to American chains that grow abroad. U.S. tastes go in an out of fashion, as Yum! Brands, Inc. (YUM) learned with its KFC franchise. YUM opened in China and its best-selling store in the world quickly ended up in Beijing. But then U.S./China tensions grew and KFC found itself at the center of a scandal, so YUM has attempted to regain its footing against local and regional competitors by broadening its menu and customizing its strategy.
The coffee-drinking culture in Europe is far different than the grande lattes that Americans love.
That said, there’s still a significant status to Starbucks, even in the U.S. market. And that continues to translate into growing sales and increasing retail demand.
But, opportunities for growth are in markets such as Singapore and Malaysia, where there isn’t an indigenous coffee culture and the American style goes a long way. As a matter of fact, according to management, more than half of Starbucks’ 528 store openings in Q1 were in China and the Asia Pacific region.
Bottom Line on Starbucks Stock
SBUX is very good at retaining customers, and the entire setup of its stores reflects a place where people can comfortably come alone or in a group and still find community. People forget that Starbucks was one of the pioneers of free Wi-Fi.
These subtle touches make SBUX far more than just a coffee shop. It’s a lifestyle. And as long as the U.S. economy continues its slow slog toward recovery, that’s very good news for Starbucks stock.
All things considered, it should come as no surprise that Starbucks stock is up 26% over the past 12 months. And all indicators signal that this growth should continue. Plus, SBUX’s 1.3% dividend should keep you patient and thinking of the long term.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
