#7 - Starbucks (NASDAQ:SBUX)
Last but not least, I find it impossible to bet against Starbucks (NASDAQ:SBUX). The company hasn’t had an easy go of it. Starbucks had heavy exposure in China and the stock plunged when the novel coronavirus first broke out in China.
But those sales are starting to recover. While some of this is helped by the misfortune of Luckin Coffee (NASDAQ:LK), Starbucks won’t need much momentum to turn things around. Or at least that’s the hope. From what I can see, demand for the company’s products is as strong as ever.
That’s been a sneaky truth about the lockdown period. Consumers showed solidarity for the decisions that governments made, but it doesn’t mean they have abandoned their love for Starbucks. It has become a very quality defensive stock.
I’ll admit, the stock may be a little expensive with a P/E ratio just north of 27 and a price/sales ratio of 3.4. The stock has shown that it has support at $70 and there’s nothing to believe that it will fall below that. But the company reports earnings in late July. If you’re on the fence about the stock that may be a good time to check back in and see if there is a clearer direction on the stock’s overall trend.
About Starbucks
Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of coffee worldwide. The company operates through three segments: North America, International, and Channel Development. Its stores offer coffee and tea beverages, roasted whole beans and ground coffees, single serve products, and ready-to-drink beverages; and various food products, such as pastries, breakfast sandwiches, and lunch items.
Read More - Current Price
- $97.16
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 17 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $103.32 (6.3% Upside)
What was the first restaurant you dined in at after the pandemic ended? That will be a decision burned in the brain of many consumers who have seen their desire for restaurant food limited to take-out or delivery options.
And there is some question as to whether or not demand will return. But hear me out. I think the lockdown is just exposing an already emerging trend. There is a generation of consumers that really don’t like going out to eat. They are willing to pay a delivery fee to have even fast food delivered to them.
But the lockdown measures brought on by the pandemic have revealed that many of these same customers may have now realized they can get some of their dine-in favorites also available via curbside delivery. That’s good for them, but not so good for the restaurants.
And that’s why restaurant stocks are looking to be one of the most intriguing stories for the rest of 2020. If only 50% of the pent-up demand is directed at these companies, there should be a tremendous opportunity for investors. But even if customer traffic doesn’t come back quite as readily, there are a number of chains that are well-positioned to handle this new reality.
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