Starbucks (NASDAQ:�SBUX) has a lot to offer. Java junkies know there�s nothing like a piping-hot cup of coffee to get you started in the morning. Investors also agree there�s nothing as tasty as a freshly brewed pot of profits to get a stock going.� Both of these pleasures in life can be found in Starbucks stock.
The 800-lb. gorilla in the coffee space, Starbucks has poured stock holders a +45% gain over the past 12 months, but over the last three months the stock is actually down nearly -8%. So, will SBUX stock continue to cool, or will its equity brew get hot again?� Here are five reasons why investors should grab a cup of Starbucks.
Starbucks Earnings, Traffic Metrics are Hot.� On July 21, the Seattle-based coffee merchant reported a 37% surge in fiscal third-quarter profit on improved customer traffic and increased customer willingness to spend more money per visit. For the quarter ended June 27, Starbucks posted net income of $207.9 million, or 27 cents a share, much higher than the $151.5 million, or 20 cents a share, in the prior year�s quarter. Not including one-time items, the company�s earnings per share rose to 29 cents from 24 cents in the prior year. �The EPS numbers were in-line with estimates. On the revenue side the company reported an 8.7% increase to $2.61 billion from $2.4 billion.� That�s better than the $2.56 billion consensus forecast.�� The all-important comparable-store sales (outlets open at least a year) rose a healthy 9%, while store traffic rose 6%.� Customers also spent, on average, 3% more per visit than they did a year ago.
SBUX Dividends and Stock Buybacks.� Starbucks made its income drinkers very happy, as the company said it was raising its quarterly dividend 30% to 13 cents a share.� The dividend bump comes just three months after the company paid its first-ever quarterly dividend of 10 cents per share.� The dividend will be paid on Aug. 30 to shareholders of record on Aug. 4.� Starbucks also said its solid fiscal condition allowed it to buy back 6.7 million common shares in the quarter, a move that is likely to boost earnings per share going forward.
A Bevy of New Starbucks Products.� Starbucks has demonstrated that it�s always looking for new ways to innovative, and for new products to enhance its bottom line. In September, the company released its Via gourmet instant coffee line.� The company also has upgraded its food menu, including the introduction of smoothies and a more extensive lineup of baked goods. The latest new product release is gourmet ground flavored coffees, which the company began selling at grocery stores in June.� The new blends, called �Starbucks Natural Fusions,� include vanilla, caramel and cinnamon flavors.
Expert Stewardship at SBUX. There�s no denying that in recent years Starbucks has seen its share of trouble.� The stock price was sinking, and the recession had really clamped down on revenues.� But in an example of expert stewardship, Starbucks CEO Howard Shultz took decisive action.� He held numerous brainstorming sessions with key employees, and told them to, �break the rules and do things for yourself.�� Shultz realized that changes had to be made, and his two-year effort to �transform our business� has put a big smile on shareholders� faces.
Buy the SBUX Stock Dip. Starbucks has been one company that�s actually weathered the recent selling storm in the overall market that began in earnest back in April. Yet since hitting a new 52-week high in June, the stock has pulled back.� SBUX now trades below its 50-day moving average; however, it still remains above long-term technical support at the 200-day moving average.� In fact, in early July the stock basically bounced back off its 200-day average.� Though this stock has a little ways to go before getting back to new high territory, the smart money now appears to be betting on another cup of fresh-brewed of new highs�and that means now is the time to go to Starbucks.
As of this writing, Jim Woods did not own a position in Starbucks.
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