Monday, February 12, 2007

SBUX (Starbucks): A Legal Addiction


What it all comes down to is legalized drug dealing (OK, maybe not that bad but I'm just illustrating a point). Society needs outlets and the three that Uncle Sam has allowed us are smoking, alchohol and caffeine. It begins as a social thing and later becomes a dependancy. It's crazy and it's to a point where my friends make mental notes of each and every Starbucks location as they are driving. I guess what I'm trying to say is that coffee is a neccessity (like gas, food, and water) for many.

My second thought is that drinking a cup of Starbucks is like having a little slice of luxury for a few dollars every day. It's also part of the reason why the iPod has been enjoying so much success, because it's considered a luxury item that can be easily accessed by the general public. It's not a 3,000 rolex or a 35,000 BMW. It's 300 dollars for the iPod and 3.00 for the coffee. Coffee is even better because of the margins but that doesn't need to be delved into.

The most important stat is that Starbuck's goal is for 40,000 thousand stores world wide and they currently are at 14,000. “We keep getting surprised by how successful we are each time,” says Peter Maslen, president of Starbucks Coffee International, commenting on how new international customers have reacted. They are gaining nice traction in non-US countries and although the stock seems pricey now, I don't see it going anywhere but up. It's currently expensive however it will seem relatively cheap a while from now. We'll see tho, but from the way my friends are mad about their coffee, it's a great buy for me. Witness.





Notes:
In Portfolio: Entry buy at 32.75 and will buy more as it goes down.
Duration: Long term
Random Thought: Justin Timberlake has a higher voice than the girl he sang with at the Grammy's... that's just wrong.