Publish date:

Tim Brown: Starbucks Can Be a Star

The coffee purveyor is scaling back stores and retains a loyal customer base, which should help it battle the competition.
Author:

Sometimes the best picks are not the most obvious ones. That's true for all walks of life, but today its true about both my stock pick and my favorite wide receiver.

People often ask me who is my favorite wideout playing the game today since that was my position when I strapped on the helmet for the Silver and Black. Terrell Owens? Nope. Torry Holt? Not quite. Randy Moss? No way. I will admit, it's a little hard to pass on T.O. though, but I do not usually pick those guys.

My answer may surprise you. The guy I love to watch play is Anquan Boldin of the Arizona Cardinals. He is a big, physical receiver who rules the middle of the field. He reminds me of myself if you add 20 pounds. I always envisioned coming off the ball and slapping a defensive back to the other side of the field, but at slightly under 200 pounds, it wasn't going to happen.

Boldin, on the other hand, will put a serious hurting on a DB or linebacker coming off the ball. He really plays

offensive

football. He has had some injury problems, but when he is on the field, he demands the defense's attention.

Oh, did I mention he just happens to wear 81 also?!

I know Arizona is not shown much nationwide on TV, but if you get the chance, watch this guy play. He has the ability to take over a game and break off a big run after the catch.

Here's a stock I think has some legs as well:

Starbucks

(SBUX) - Get Starbucks Corporation Report

.

Now the stock is definitely beat up -- there's no arguing that. It's lost more than 46% of its value in the last year and closed yesterday at just $14.52. Typically, I pick companies with strong balance sheets.

However, Starbucks' financials aren't outstanding by any means, but they are good enough. The company has a forward price-to-earnings ratio of 16.13 and a return on equity of 19.39% -- both decent numbers. Its institutional support is a little low at about 64%. Revenue stands at $10.31 billion.

TheStreet Recommends

However, sometimes it's more important to look beyond what's in its financial documents. Starbucks has been beaten down, in part, because of rising competition, overexpansion and rising costs, including that of milk. True competitors, such as

McDonald's

(MC) - Get Moelis & Co. Class A Report

and

Dunkin Donuts

, are vying for more traction in the high-end coffee space.

That said, I believe the company has done a number of things to address these issues, and I like its management and its plans for the future. First, the company announced earlier that it was shutting 600 stores in the U.S., which should help keep some costs down while filling the stores that are open. Besides, it seems there is a Starbucks on every corner anyway.

Since the U.S. is satruated with stores, the company is looking to take advantage of its brand recognition overseas, which makes a lot of sense to me. And, as for the rising costs, they are the same for everyone in the space, so I am not as concerned about those.

Plus, Starbucks has great brand recognition and customer loyalty here in the U.S., so I don't see its competitors encroaching substantially on the Starbucks' clientele.

It's not always about the obvious choice.

Boldin is my favorite receiver and Starbucks is a great play for you today.

Keep moving the chains!

At the time of publication, Brown had no positions in stocks mentioned, although positions may change at any time.

Tim Brown played 16 seasons in the NFL, where he made nine Pro Bowls. After a brief stint with the Tampa Bay Buccaneers in 2004, Brown retired as an Oakland Raider. He was a Heisman Trophy winner in college for Notre Dame.