Starbucks: The Best Time to Buy
Starbucks deserves a special place in my stock portfolio. My intention is to buy more of the coffee shop shares, after it bounced by nearly 9.5% to follow the strong Q3 financial report on November 2. I believe the stock has a potential to climb at least 7% to 10% above its current psychological resistance near the round figure of $100 per share, if one takes into account that it just peaked at $115.48 not so long ago, in late April this year.
Starbucks not only beat Wall Street experts' estimates in Q3 to jump over $1 of quarterly profit per share for the second time in its corporate history (the first belongs to Q2 2021), but also made it on all-time record sales. The company also provided an upbeat annual forecast, relying on its updated store technology and seasonal menu enhancements. Elevated demand for its Pumpkin Spice Latte since August and other new fall-themed drinks like Iced Pumpkin Cream Chai Tea Latte and apple-flavoured Espressos, new types of croissants is here, as it already led U.S. same-store sales to 8% rise in the quarter. Starbucks foresee its fiscal 2024 per-share profit growth of 15% to 20%, above analysts' estimates of 15.1%, with its comparable sales growing between 5% and 7% globally, including China's rise 4% to 6% in the last three quarters of 2024.
Placer.ai data indicated a more than 20% surge in visits on the day of the Pumpkin Spice Latte launch, while Starbucks CEOs said the seasonal assortment created record average weekly sales. The Christmas quarter always looks lovely for the "affordable luxury" stores, and Starbucks is occupying even a more comfortable customer base niche, as many gourmands may easily allow to pamper themselves by just a little bit more expensive coffee breakfast. Even younger audience would probably feel O.K. with another morning coffee fix. The choice of more affluent clients could be also shifted if favour of relatively cheaper chain stores including Starbucks, as wider restaurant industry is much more painfully exposed with an inflation slowdown of demand.
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