Expansion Could Be Boost for SBUX Stock
Starbucks Corporation (NASDAQ:SBUX) has had some variability in the past few weeks, with SBUX stock still trading in the $58.00–$63.00 range; in other words it has been trading around its yearly high.
The company continues to expand internationally. In October, Starbucks announced plans to open a store in Italy. In the country that invented espresso, Starbucks, a multinational company generating almost $14.0 billion in sales, is entering a competitive market. So far, the company had avoided the Italian market because it considered it too difficult to conquer, but now, it is expected to open its first-ever Italian location in Milan before long.
Starbucks has also recently launched its first Chinese online e-commerce platform using Tmall, operated by Alibaba. Starbucks stock will benefit significantly, because the company can count on tremendous growth potential using this latest evolution of the chain into a kind of social network for its fans. (Source: “Starbucks China Launches e-Commerce Site on Tmall,” Starbucks Corporation, December 20, 2015.)
The service will help Starbucks maintain a dominant position in mobile commerce and its mobile app is increasing in popularity, thanks to the “Starbucks Rewards” loyalty program, which attracts repeat customers. (Source: “Can Seattle Delivery Boost Starbucks Corporation (SBUX) Stock?,” Investor Place web site, December 3, 2015.)
Starbucks Stock Could Soar on Strong Earnings
Starbucks expects to earn between $1.87 and $1.89 per share for the year, pushing the stock to new records by the next quarter, thanks to a further sales push driven by new markets. Starbucks is constantly changing its model, keeping pace with cultural trends, and it’s paying off. (Source: “Starbucks’ new ‘coffee theatre’ makes play for London market,” The Guardian, October 20, 2015.)
In early December, Starbucks unveiled a new delivery service in Seattle. The news did not make a major splash and it has not driven SBUX stock higher on the charts. However, the long-term implications, as with most of Starbucks’ innovations, are significant.
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With its Italian launch and the company’s expansion in France (Starbucks is opening a new location in Nice airport, among others), the company’s international expansion is just more evidence of Starbucks founder Howard Schultz’s confidence in his company and its product.
Starbucks in 2015 has been all about innovation and it is not surprising that the stock has gained almost 50%. Starbucks continues to evolve and alter its model, starting from a small coffee roaster in Seattle to offering wine, beer, and tapas-style appetizers with bacon and cheese in a select number of stores—which will, no doubt, be growing. (Source: “Starbucks has a plan for evenings: wine, beer, and small plates,” Fortune, August 17, 2015.)
The program is still in its infancy, but the Seattle company, which controls 13,000 outlets in the U.S. alone, has the recipe to keep increasing sales and drawing more customers through its doors.
The Bottom Line on SBUX Stock
The coffee giant has also requested permission to sell other alcoholic beverages in several hundred stores in the U.S. Starbucks is optimistic about the new course. Rachel Antalek, Starbucks’ vice president for innovation stated: “There aren’t that many places to go in the evening where you can go very relaxed, very casual. It’s not loud. You can actually have a small group and hear yourself talk.” (Source: “‘Evenings’ at Starbucks: Coffee shop to sell wine, craft beer, small plates,” USA Today, August 18, 2015.)
All the more reason to be bullish on SBUX stock.