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Cramer: The Rise of the Stay-at-Home Consumer Hurts Starbucks
Posted at 11:38 a.m. EDT on Friday, Nov. 4, 2016
Do you need to go to Wrestlemania if you can play WWE at home? Do you have to spend all of that money at a pro basketball or football game when you can play NBA 2K or Madden? Is it imperative that you spend $12 a throw at the movies and another $8 for candy or popcorn and a soda when Mafia III or Grand Theft Auto is playing at home and you've paid for it in spades?
That's a huge part of this new economy that Strauss Zelnick, the unbelievably good CEO of Take-Two Interactive Software (TTWO) laid out last night, and it's a secular change in behavior, not something that's going to switch back any time soon.
Which is why today it was so hard to figure out what to pay for Action Alerts PLUS charity portfolio holding Starbucks (SBUX) . Out of nowhere Starbucks, long a standout among retailing and hospitality giants, has simply become the best house in a bad neighborhood. It's got excellent cash flow, a boosted dividend and good same-store sales, all of them not what I was hoping for in terms of an upside surprise but certainly better than anyone else. It has a terrific Chinese kicker, as China will become the largest portion of the chain in a short period of time.