Dear Reader,
What’s on my mind today is Starbucks.
Not because it’s early Monday morning (a great time for a hot cup), but because so many people saw the news about Starbucks’s new CEO and are asking me, “is now the time to buy Starbucks (SYM: SBUX) stock?”
Those of you who have been around awhile know that Starbucks is one of my all-time favorite companies.
In the ‘90s I watched this company add stores and stores and the stock go higher and higher.
I remember when it crossed a hundred bucks a share.
It was always too expensive for me.
—ACTION REQUIRED—
NOTICE: Our new “Income Alert” just went live…
To claim your piece of the $8 billion Big Pharma is legally obligated to pay out…
…make sure you go here now to get on the list.
But you have to get in now to be on our distribution list.
If you’re too late, you’ll see a “Membership Closed!” notice and will not be allowed in.
Get on the list before it closes >>>
===
So, I actually had to wait until the 2009 crash before I was able to buy Starbucks at a cheap price.
I remember the stock broke from $100 and starting coming down…
Once it broke below $20 a share I started buying, and I bought it all the way down to $13.75, which is great.
Now, last week Starbucks announced that they snatched the CEO from Chipotle, which is great news for Starbucks.
One of the things I’ve always liked about Starbucks is it’s a high-margin business; you know – it’s basically selling coffee.
So you have a $30 billion-a-year company with about $4 billion or so in net earnings. Those margins are pretty good!
Now what’s great for Starbucks is that Brian Niccol, the CEO known for turning around slowing businesses in Chipotle and Taco Bell …
Knows how to retail.
And what I mean by “retail” is, he knows how to sell things.
I first learned about the power of retailing when I was in my 20s and I walked into a Bed, Bath and Beyond.
The company was started by a couple folks in the garment district in New York.
And I remember walking in, seeing products lined floor to ceiling.
They had them in every square inch of the store.
I thought to myself, “wow – look at this place; these guys don’t waste an inch of space.”
Because they understood the key metric in retailing is revenue and profit per square foot.
And the CEO of Chipotle understands this, too.
This guy knows how to sell things!
So he’s looking at the customers coming in and asking himself: how can I increase the average order value on every person who walks through that door?
What he needs to do is get someone to go from spending $6 every time they visit Starbucks, to spending $7 every time they visit Starbucks.
Because there’s only really two ways to make money in business:
You either get more customers, or you sell your existing customers more stuff.
Now, in North America, they have to focus on selling existing customers more stuff. That’s their primary objective here; increase the average order value every time someone visits.
In China and other places, they have a different problem: how to get new customers. Which is a totally different type of problem.
But Brian Niccol, this is a guy who knows how to sell.
You can use fancy terms all you want but at the end of the day, business is “get new customers, sell them things.”
This hire is a great move for Starbucks in my opinion.
So, what do I think about the stock? Is it time to buy Starbucks? This is what folks have been asking me.
Well, I’ll tell you what…
Turnarounds don’t happen overnight.
Right now, Niccol is just joining Starbucks.
I’m sure, like me, he’s spent decades contemplating and thinking about Starbucks’s business.
But it’s going to take him a quarter to really understand the internals of this business, and then another quarter to start to execute on his plan.
So I’m in wait-and-see mode.
The way I see it, right now Starbucks might be good for a 20%, 30%, 40% pop…
But you guys know me by now – I like to buy things when they’re super cheap.
And we know that’ll happen at some point in the future.
So my opinion is, hang tight. Let’s see if he’s able to turn this around in a way that would significantly and meaningfully move the needle in China and in America before we do anything here.
And truth is, we don’t have to chase Starbucks at today’s price.
One of my favorite stocks in the world, I was just telling my readers, is comically cheap.
They’ve found what looks like a cure for a common type of cancer. And they just got FDA approval.
Revenue came in 20% higher than expected last quarter, and sales expectations for 2025 are roughly four times 2024 sales.
The stock’s trading for $10 and change.
One billionaire dubbed “the greatest biotech trader of his generation” just bought another 5 million shares.
I strongly believe the train’s about to leave the station for this stock.
When it does, one of the best opportunities on the market right now, will be gone forever.
Here is our 30-page writeup on this stock.
“The Buck Stops Here”
P.S. If you still haven’t read the free “Our #1 Takeover Target for August” report…
…please take a few seconds to view it right now before the report link expires.
I eventually plan to take this free report down, so do yourself a favor and check it now…
