Starbucks is enjoying a caffeine rush on Friday after the coffee king reported its latest quarterly results.
Shares of Starbucks (SBUX) were up 4% in late morning trading. The company announced Thursday afternoon that fiscal first-quarter sales jumped 11% from a year ago and hit a record of $3.8 billion. Earnings per share were up 14%.
Although these numbers simply met analysts' forecasts, many investors were clearly impressed to see the company continue to grow, particularly in international markets. Starbucks said same-store sales rose 11% in its China/Asia Pacific unit.
But can the stock keep brewing up strong returns? Shares now trade at about 26 times fiscal 2013 earnings estimates, a bit of a premium to rivals McDonald's (MCD) and Dunkin Brands (DNKN) as well as K-Cup "frenemy" (and David Einhorn short target) Green Mountain Coffee Roasters (GMCR). Still, many traders on StockTwits think Starbucks deserves to trade at a lofty price.
Great points. The international growth plans of Starbucks get most of the attention. But the company continues to dominate in the United States. And the stock has been on a tear since Schultz came back to lead Starbucks in 2008.
It's an amazing comeback for a company that just a few years ago was being accused of having saturated the market with stores on nearly every corner of most big cities and towns. It brings to mind the hilarious "Best in Show" scene about a husband and wife meeting at Starbucks ... but not the same Starbucks. "We saw each other at different Starbucks across the street from each other."
One of my CNNMoney colleagues wants some credit for Starbucks' success. And another trader points out that Starbucks may have replaced a certain tech company as Wall Street's latest darling "it" stock.
Catherine, follow the Peter Lynch "buy what you know" mantra. For a mere $52 more than the $5 you probably shelled out for that tasty beverage, you can buy a share of Starbucks stock!
I think that's a compliment. But Starbucks investors have to hope that the stock doesn't plunge 35% in a few months like the once invincible Apple (AAPL) has done. Speaking of Apple, it is interesting that Starbucks avoided a huge sell-off considering that its results did not blow past forecasts. But that's kind of like the whole market right now. Apple can apparently do nothing right and everybody else gets a free pass and the benefit of the doubt.
Finally, it's time for the Reader Comment of the Week. Apple was THE story. Lots of funny tweets about the huge sell-off following earnings. But here was my favorite. It was in response to my joke about how tissue makers Procter & Gamble (PG) and Kimberly-Clark (KMB) might benefit from increased sales to inconsolable Apple shareholders.
Hedge fund manager David Einhorn's newest short target: Chipotle Mexican Grill (CMG).
Greenlight Capital's Einhorn thinks Taco Bell, owned by Yum Brands (YUM), will eat Chipotle's lunch with its new Cantina-style menu.
Chipotle was one of four stocks that Einhorn discussed during his presentation at the Value Investing Congress in New York. He also spelled out a case for why investors should buy General Motors (GM) and health insurer Cigna (CI). MOREMaureen Farrell - Oct 2, 2012 12:56 PM ET
Even billionaire George Soros caught Facebook (FB) fever this spring.
The hedge fund manager purchased 341,000 shares of the social media company during the second quarter, according to SEC filings.
Hedge fund managers aren't forced to specify when during a quarter they purchased stakes in various firms. Still, it's safe to say that the investor who infamously made $1 billion shorting the British pound is under water on his Facebook bet.
Related: Warren MOREMaureen Farrell - Aug 14, 2012 7:13 PM ET
It's been a good week for heavily shorted stocks reporting earnings. I wrote (and did a video) Thursday about how Green Mountain Coffee Roasters (GMCR) surged despite poor guidance.
First Solar (FSLR) was another company that popped on earnings news even though there are still many economic headwinds in the U.S. and Europe facing the maker of solar panels. That made it Thursday's Stupid Stock Move of the Day.
#StupidStock Move of MOREPaul R. La Monica - Aug 3, 2012 12:18 PM ET
Green Mountain Coffee Roasters (GMCR) issued some decaf guidance. But that didn't matter to investors. Shares popped nearly 30% Thursday morning even though the company provided a near-term earnings outlook Wednesday that was less than stellar. It appears investors are excited to hear that the company is boosting its inventory ahead of what it hopes will be strong demand next year.
That's dangerous. Many companies have been burned by boosting inventory MOREPaul R. La Monica - Aug 2, 2012 10:41 AM ET
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