NEW YORK (TheStreet) -- Some of history's most important agreements - major and minor, involving real disputes and amiable "win-win" situations -- have come over a simple cup of coffee. Just imagine the wars averted, the marriages that have been proposed over a $5 beverage.So, evaluating the phenomenon that has become Starbucks ( SBUX), it seems appropriate that I measure the company on its social effects, in addition to its impact on the market.
To support the growing demand, Chipotle has gone through an aggressive expansion plan to where it now has 1,230 restaurants, adding 150 new locations in 2011. It does not plan to stop there, but will open between 155 to 165 new restaurants in 2012. Not only does the company receive tremendous support from investors, it is clear that by its recent string of earnings beats the company continues to benefit from a strong loyal customer base that loves their burritos. So if astute investors can substitute lattes for burritos and apply an extra 20-point multiple to Starbucks, they'll have a stock that is undervalued by at least $15 dollars. In essence, for a $5 cup of coffee, investors get a $15 premium on a stock that can only grow from current levels -- one that just earned $309.9 million or 40 cents per share where analysts on average had expected a profit of 39 cents per share on revenue of $3.18 billion, according to FactSet.
Similar to Chipotle, it is clear that Starbucks expects to grow into any valuation permitted by heavily expanding customer traffic. So why is it not presently trading in line with Chipotle?