Starbucks, a company that has persuaded millions to buy a simple cup of coffee at a premium price because of the atmosphere and the art of making that cup of coffee. Howard Schultz runs the company with the idea to expand the storefront and go into other drinks like tea and food with acquiring La Boulange. This drive to expand and change the way we consume certain simple goods shows foresight and will be very good for shareholders in the end. The company owning all the stores is also a better thing for shareholders because it creates even more consistency from one store to the next and makes their reward program easier to implement. The reward program is genius because it takes longer and spending money to get to the level that matters and then to get a free drink instead of nine or ten purchases you have to purchase 12 separate times. There was also good news about the China Starbucks' stores and that the are profitable and attracting more Chinese since they were first opened.
The P/E ratio isn't the lowest and should be lower but with their recent acquisitions and purchases it does put pressure on the earnings. Earnings are still growing and will be back to better levels in the next few quarters. Starbucks pays a good dividend and has increased it 32.6% in the past three years. It has really good sales growth and has become a staple of the American coffee scene. Schultz was able to turn a simple community that did not have high profit margins and turn it into a lavish, luxury good consumed by millions daily.
Disclosure: I do not own nor intend to open a long or short position in Starbucks.
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