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Starbucks is a Vestact-recommended stock, because people like caffeinated drinks. We've owned this company since February 2013, when we advised clients to sell Coca-Cola and buy Starbucks instead.
When we started buying them they traded at a (split-adjusted) level of $28.32 and now, eight-and-a-half years later, they are at $109.80 per share. For the record, they have outperformed Coca-Cola by a country mile since 2013, so it was a good switch.
Starbucks reported third-quarter numbers late last week, which were slightly disappointing. The stock is off by about 3% since then but I'm not going to dwell on that, because it's not important. They'll rebound in the next quarter, I'm sure.
More interesting is that Starbucks is 50 years old this month. It was started in Seattle in 1971. Howard Schultz joined the company in 1982 and then bought out the founders in 1987. They went national in 1991, focusing initially on the cities of Chicago and Los Angeles. They listed on the Nasdaq in 1992.
Today the US has more than 37 000 coffeehouses, with Starbucks accounting for about 15 000. They are also massive in Europe and China. The stores are designed to look and smell inviting, and to be a "third place" where people can meet and socialise, between home and work. See the quote from Schultz in the image below.
The company emphasises efficiency in ordering and paying via its mobile app. More than 20 million loyalty programme customers have an aggregate of over $1.6 billion loaded on their apps or loyalty cards.
Another noteworthy development is that Starbucks has recently increased the wages of its baristas in the US to $17 an hour. They hire better people, who make a big effort to spell your name correctly when you order in-store.
We rate Starbucks as a buy. It has a dividend yield of 1.85% per annum, and great prospects.
