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My Takeaways and Observations

Originally published April 25 at 4:37 p.m. EDT

Dougie "Debbie Downer" started with ursine comments about Starbucks (SBUX) - Get Starbucks Corporation Report and China.

China's data is fake, like Elaine told Seinfeld. Hence, my short Trade of the Week, iShares China Large-Cap (FXI) - Get iShares China Large-Cap ETF Report .

I remain committed to the view that the price of oil will come back down and that energy stocks can be shorted.

The divergence between tech and cyclicals. How does it resolve itself?

Papa at Valeant (VRX) . Humbug.

Inflation on the ascent. Bond short? Working on it!

A Tom Collins with Tim Collins?

Thanks to Barron's Randy Forsyth!

Here is some good stuff on RealMoneyPro:

    Jim "El Capitan" Cramer (fresh off his Seder) on the Four Plagues. And Jim on the market's rotation.

    Ed Ponsi "Scheme" on higher rates.

    TheStreet Recommends

    Tim Melvin, PE manager.

    Daniel Dicker goes Mr. T on us.

    Carolyn Boroden sees some resistance.

    Position: Long SDS large, OAK, DD; short SPY, QQQ, IWM, CAT small, SBUX small, TSLA small, NFLX small, MS small, GS small, FXI, CMCSA small, DIS small, LNC, MET, SLB, XOM, AAPL

    Starbucks Looks Lukewarm to Me

    Originally published April 25 at 7:51 p.m. EDT

    I'm maintaining my short of Starbucks (SBUX) - Get Starbucks Corporation Report after last week's slight earnings miss relative to consensus expectations -- and as you might recall, I put SBUX on my "Best Short Ideas" list on Jan. 29 at $60.60.

    Here are my concerns and observations regarding the coffee giant's latest earnings:

    • Slowing U.S. sales and comps. Comps in SBUX's Americas segment slowed quarter over quarter to 50 basis points below their two-year average. Looking ahead, large comps (+4%) will also challenge forward sales.
    • Moderating food sales. The contribution that food makes to comps is moderating, down to 16% in the latest period from a previous 20%. Food's contribution to aggregate comps also fell to 2% from an earlier 3%.
    • Earnings quality. The quality of Starbucks' earnings is less than meets the eye. The company repurchased about $1.6 billion of shares in its latest quarter, or more than triple the amount from a year ago. Without the buyback, SBUX would have earned just $0.38 per share, falling below Wall Street consensus.
    • A weakening global economy. SBUX investors' greatest fear should be the possibility of moderating global economic growth (or even a recession). If either of those happen, demand elasticity for the coffee chain's premium-priced products will face pressure.

    The bottom line: Slowing growth at a peak multiple seems to like a bitter combination for investors to swallow.

    Position: Short SBUX

    Starbucks, Allergan, General Electric and Twitter and Schlumberger is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells SBUX, AGN, GE, TWTR and SLB? Learn more now.

    Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.