Shares of Starbucks (Nasdaq: SBUX) advanced about 40 percent in 2013 and have averaged roughly 17 percent annually over the past decade. It’s still an attractive portfolio candidate.
With more than 13,000 stores in the Americas already, it’s reasonable to expect U.S. sales growth to slow. But there’s more to Starbucks. For one thing, it has a strong international presence, with much more room to grow. (It boasts more than 19,000 stores in more than 60 countries.)
Starbucks stores in China, for example, have been enjoying robust sales growth. The company opened 317 new stores there in 2013 and plans to open 750 in 2014. Management and investors have high hopes for India, too, as there has been a very positive customer response to Starbucks’ recent entry there.
Starbucks is also moving beyond coffee. It now owns and offers La Boulange bakery products, Evolution Fresh juices and Teavana teas. With Teavana, management believes that Starbucks can “do for tea what it’s done for coffee” by growing and expanding the tea industry and the tea bar concept while introducing a wide array of handcrafted tea beverages and tea-inspired food.
Meanwhile, Starbucks also offers its wares through supermarkets, and in recent years has introduced its Verismo single-cup espresso machine, its Starbucks Card mobile payment system, and more.
Starbucks stock offers a dividend yield near 1.3 percent, too.
Ask the Fool
Q: What are “defensive” stocks? – R.C., Detroit
A: Defensive stocks are tied to companies whose fortunes don’t fluctuate too much in relation to the economy.
Food, tobacco, energy and pharmaceuticals, for example, are defensive industries. They’re seen as more stable than their “cyclical” counterparts, such as the homebuilding, steel, automobile and airline industries. Cyclical industries aren’t necessarily to be avoided, but expect some bumpiness.
My dumbest investment
Early in my attempts at investing, I got a flier with information about Bodytel, a developer of wireless telemedical devices. (I don’t think it even exists anymore.) I did no due diligence on the stock. I fell for the hype hook, line and sinker.
I lost almost every cent, but it taught me never to invest without checking up on where I was putting my money, no matter how great an opportunity it seems to be. – L.F., online
The Fool responds: Bodytel was a penny stock and serves as a great example of why such stocks are usually best avoided. Bodytel had a Bluetooth-enabled blood glucose meter to offer, and that might have had many investors intrigued, but an exciting story and prospects are not enough. If an investment seems too good to be true, it very well may be. Great investments generally don’t need people hawking them via fliers.