Is Starbucks a Good Investment?

OVERVIEW

Starbucks Corporation is a company based in the United States. The company operates thousands of restaurants around the world. I these restaurants, the company serves a variety of non-alcoholic beverages and food options. The company also designs and sells ready-to-drink beverages which can be found at grocery stores around the world. The company operates over 30,000 stores. The company was founded in 1971.

Why You Should?

  1. COVID-19 vaccine optimism and recovery has caused the company’s stock price to cross over $100. This recovery will benefit the company as people purchase more Starbucks products as they return to work, school, corporate events, and travel. This will benefit the company in the future and will also benefit investors in the company.
  2. Starbucks has a strong growth plan for the future. The company looks to have over 50,000 stores at the end of 2030. The company sees strong growth through its digital program as well as international growth, especially in China. The company continues to see growth right here in the United States as they continue to grow in areas where Starbucks is less accessible to the population.
  3. Starbucks continues to offer new and innovative menu offerings. Some of these include offering substitutes like oat and soy milk as well as plant-based meat products in their food product line. New and innovative beverages include the company’s Cold Brew line as well as other cold drinks. These new offerings will further increase the company’s growth over the next couple of years.
  4. Starbucks has an extremely seamless digital platform through the Starbucks app. This platform has helped the company drive sales and volume during this pandemic, a time where cafes are closed. The company has also increased investments in digital and AI products in order to lower operating costs and improve the customer experience in its stores and drive-through locations. This will also benefit investors.
  5. Starbucks has developed an excellent brand over its history. The brand displays the company’s premium coffee and consistent beverage offerings. Consumers around the world might continue to flock to Starbucks stores in order to purchase a cup of coffee instead of going to a small cafe. This strong brand will benefit the company’s future growth and will also benefit investors of the company.
  6. Starbucks has seen revenues and profits fall in the financial year of 2020 due to the impacts of the COVID-19 pandemic. However, the company sees a strong path for recovery and future growth. The company will report strong financial results in the future. This will benefit the company’s future growth and will also benefit investors in the company. In the financial year of 2020, the company reported revenues of around 23.52 billion and profits of around 928 million. Both of these metrics are significantly lower than what the company reported in the financial year of 2019 when the company reported revenues of around 26.5 billion and profits of around 3.6 billion.

Why You Should Not?

  1. Tough competition in the coffee and restaurant industry might continue to hurt Starbucks in the future. Some of these companies include thousands of small business cafes as well as other large companies like Dunkin Donuts, McDonald’s, and many others. However, as shown above, Starbucks has separated itself from this competition in many ways.

MY OPINION

In my opinion, I think that Starbucks is a great long-term investment due to COVID-19 vaccine optimism, a strong future growth plan, new and innovative menu offerings, a good digital platform, good brand recognition, and strong financial results. However, tough competition might hurt Starbucks future growth.

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