Company name: Starbucks
Tickers: SBUX.US (US), SRB.EU (EU)
Entry Price: $85, €72
Target Price: $95, €81
Projected Yield: 11.80%
Time Line: 3 to 6 months
Starbucks is one of the largest US based coffee companies and coffee shop chains, which has over 32,000 outlets in 75 countries.
What's the Idea?
Capitalize on the stock that may grow with the digital services sector development and the business recovery after the pandemic.
Buy Starbucks US Shares >>
Why Trade Starbucks?
Reason 1: Outlets Reopened, Business Is Recovering
The COVID-19 lockdown had a significant impact on Starbucks business. The company had to temporarily close most of its shops, which led to the earnings declining by 38% in Q3 2020. However, as the situation around the world improves, the business starts returning to its normal operation. By late June, Starbucks had reopened 97% of its stores worldwide, and 87% of its licensed stores.
The company continues to expand, with 130 new stores being opened in Q3. Most of them (100 coffee shops) were opened in China, with the total number of Starbucks shops here now amounting to over 4,400. Starbucks plans to further expand its presence in China, taking advantage of the financial difficulties of Luckin Coffee, its competition. The gradual easing of the lockdown measures and the full coffee shop reopening will help restore sales and allow Starbucks to continue its expansion in the global market.
Reason 2: The Rise of Digital Service Sector and a New Business Model
During the pandemic, Starbucks had to adapt to a new environment. The lockdown measures boosted the popularity of its mobile app: in Q3 2020, it was downloaded more than 3 million times, which is 17% more compared to the previous quarter. During the lockdown, drive-through and mobile app orders accounted for 90% of sales. To support sales in China, Starbucks launched a delivery service in May within WeChat, a popular Chinese app.
In addition to the digital business, Starbucks focused on developing new stores with minimum contact with customers, which resulted in Starbucks Pickup and curbside delivery. In case the pandemic arrives again, the company's business model will be adapted to the negative conditions. The expansion of the digital service sector combined with the development of contactless coffee shops will contribute to a quick recovery of sales and the achievement of pre-crisis growth rates. This may become a driver for the stock price rise as well.
How to Use the Investment Idea
- Buy Starbucks stock at $85 in the US market or at €72 in the EU market.
- Allocate no more than 3% to 4% of your portfolio amount. To build a balanced portfolio, you can use our analysts' recommendations.
- Sell once the stock reaches $95 in the US market or €81 in the EU market.
How to Buy Starbucks Shares?
If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.
After opening an account, you can buy shares in any of the following ways, whichever is more convenient to you:
Freedom24 Web Platform: Go to the Web Terminal Section, type SBUX.US or SRB.EU (Starbucks tickers in the NASDAQ and Xetra) in the search box, and select Starbucks Corp. in the results. Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.
Freedom24 iPhone App: Go to the Price screen and tab the search icon in the top right corner. In the dialog that shows up, type SBUX.US or SRB.EU (Starbucks tickers in the NASDAQ and Xetra), and select Starbucks Corp. in the search results.You will then see Starbucks Corp. stock in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of shares you want to buy and click Buy.
Invest in Starbucks, don't miss the opportunity while the coffee business is rising!
Buy Starbucks EU Shares >>
*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.