The stock of Starbucks Corporation is under pressure in the wake of an announcement that it will close 150 stores in the United States. Investors may recall a similar announcement in July of 2008 (although it was 600 stores at that time). "It's deja vu all over again," to quote Yogi Berra. The situation presented a good opportunity then and it presents a good opportunity now.
Starbucks is more than just another brand or another food/beverage retailer. Starbucks has a growing base of loyal customers who seek that "Third Place" to spend their time. The lines at Starbucks have not diminished because it delivers an experience that its customers crave. As a result, it dwarfs the competition yet still has plenty of room to grow (for example, China).
Every great company hits a bump in the road every now and then. Although Starbucks is not a great bargain at its current market valuation of about $67 Billion, it is now reasonably priced with the ability to earn about $3 Billion in owner earnings today and predictably grow that amount at a reasonable pace. Temporary issues once again present an opportunity to invest.
Disclosure: The author and the author's family members own shares of Starbucks Corporation. The author has received no compensation to write this article.
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