SBUX

I told you this coffee stock is a perfect and unsinkable investment, and here it is bubbling to the $100 surface. The great and powerful Wizard of Chipotle, CEO Brian Niccol, is performing a small miracle here and now, trying to copy and scale his former Mexican Grill success into an even wider Starbucks window of opportunities. Starbucks gained more than 8% this week to touch $110 after posting a reducing weakness amid bets on revitalization. Not a poor style to start a coffeehouse career for the former chief of Chipotle and a board member of companies like Walmart and Harley Davidson who also took brand management positions in P&G and Pizza Hut before.

Simple decisions like removing extra charges for alternative non-dairy milk from oat, almond etc, as well as re-adjusting and digitizing pricing strategies and streamlining Starbucks' menu already made available some "positive response" to the changes. Well, the chain's operating margin slid by 3.9% to 11.9% YoY, but the difference has been used with a good purpose of encouraging and rewarding store partners' employees with wage bonuses and other benefits and hours. The market seemingly believes this would help by bringing in more purchases, orders and visits, and more loyal customers for re-buys.

Same-store sales globally dipped by 4%, instead of a worse 5.5% decline in consensus worries before the report. EPS (earnings per share) of $0.69 on revenue of $9.4 billion was only slightly better than a supposed decline from $0.80 of EPS to $0.68 on sales of $9.35 billion. Discounted price policy attracts loyal customers but naturally leads to lower income, which markets consider as a normal phenomenon during a transition period. Meanwhile, the clients' base is more important. And the revenue achievement was very close to its previous record values. As to EPS, this is still far from excellent numbers above $1 per share, which were peculiar for late 2023. But more time may provide more space for recovering, and so my base scenario for the stock is climbing on expectations for approaching profit records in the second quarter of 2025, as a hopeful projection.

When it came to $95, I told you that even $85 would be a golden chance to Buy, and then it retraced to $86.35 as a mid-summer low. And now I feel that even the area around $110 is good enough while any attempt to decrease to $105 would be a great opportunity to enter the rising wave for Starbucks. But going to repeat 2021's high above $125 is still within bulls' reach.