Is “Just Buy Starbucks” Still a Good Way to Invest?


Starbucks

Starbucks was the stock to buy in the early-to-mid 2000s. Though the company went public in 1992, they were all but unstoppable during the early oughts. The company opened stores left and right, expanded into international territories, and made headlines for selling non-coffee products like Coldplay records. Due to their success and enormous growth, many investors bought as much as they could in the company. Those investors also told their loved ones to do the same with whatever money they had.

These days, Starbucks is…well, Starbucks. It’s still the biggest coffee chain in the world. They’re still making billions in profit. Howard Schultz, the company’s CEO, will step away from his post this month but stay within the company. Yet the company is no longer one of the most talked-about chains, and suffered through years of dwindling sales and closures. They lost customers to McDonald’s, of all places, and failed to quickly adapt to growing consumer trends.

Does that make Starbucks ($SBUX) a terrible investment? Not in the slightest. Should you invest all of you hard-earned money into the company? Let’s take a look.

Starbucks is still growing, but they’re slowing down a bit.

The company’s stock grew by 98.47% in the last five years, but they saw a decline of 2.97% in the last year. They are still expanding in different countries and opening more locations stateside, making up for lost time when they closed hundreds of locations in the beginning of the decade.

At the same time, Starbucks must fend off competition from quick service restaurants. These restaurants are gaining in popularity thanks to utilizing self-service and mobile ordering devices. Starbucks since implemented mobile orders and improved meal offerings in their stores, but they’re not known as a full-service restaurant like, say, Panera.

Starbucks might or might not be a good investment, depending on who you ask.

Only 33% of Starbucks investors on StockTwits (our parent site) believe the company is worth investing in. The other 67% blame everything from Schultz leaving to volatile coffee prices for the company’s decline in the last year. The majority consensus here is that, no, you should not buy Starbucks stock.

There are other factors to consider. Despite being down in the last year, the company is up 3.99% since the beginning of the year. The company also met or exceeded analysts’ earnings expectations in the last year. Though it’s scary that the company’s longtime CEO and spokesperson is taking a lesser role, it’s not going to mean the end of Starbucks. It could even mean future growth opportunities with a new person steering the company.

Before you invest in the company — if you want to invest in the company — be sure to do your research on the last several years of Starbucks’ performance. If you don’t want to invest in the company, simply don’t.

Should you invest all your money in Starbucks?

You should never invest all your money in anything. Regardless of what you buy, you should always buy other securities to offset potential losses. If you invested everything in Starbucks and Starbucks fell into a decline for several years, you would sustain several years of losses. If you invest in a low-cost index fund, another common stock, and Starbucks, you run less of a risk of losing your money. This is because each stock or fund will perform differently than the next, and possibly offset any losses with potential gains.

Simply put, never put your eggs in one basket.


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