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Expect Starbucks to continue serving fresh mugs of growth, profits and increasing dividends. In the last three years, the dividend payments have more than doubled. Based on the same period's payout ratios and profit growth, another increase within the next 12 months should not come as a surprise.
That's exciting news for shareholders, but more importantly, it's not too late to ride the java profit train. The key is management. During the Great Recession, Starbucks was exceedingly quick to close locations that weren't performing, thus preserving cash and shareholder value. Starbucks' management is battle-tested during growth and contraction periods. That's the safety net you want when buying 52-week highs. Shares of Starbucks closed Tuesday at $67.10.
As market conditions improved, management changed from a defensive posture back to growth and expansion faster than Jim Cramer
can push the "buy buy buy" button on "Mad Money."
The current window of opportunity comes from Starbucks not reporting earnings until July 25. You can almost smell the profits brewing already, and the latest string of new 52-week-high closes clearly demonstrates the market approves displaying calories on the menu. Does anyone seriously believe hungry shoppers are not going to buy a food item because they now know the calorie count? Of course, they are going to buy. They may change their purchasing for a week or two, but not permanently.
Consumer decisions are based on emotion and justified with logic, not the other way around. Hunger is a powerful emotion, and digits on paper have little impact on a sweet tooth. I think the positive goodwill gained from increased transparency offsets changes in consumer behavior.
SBUX Revenue Quarterly data by
Currently, analysts are anticipating about 53 cents a share in profits from the earnings report. The revenue and profit trend justify the market's bull trend reaction. You want to view each dip in price as a buying opportunity. Stocks don't travel straight up or down, and you can use the market volatility to your advantage.