Perkless Starbucks Stock Disappoints Recent Buyers

To say that those who invested in Starbucks stock over the past nine months or so are disappointed is probably putting it mildly.

If they were banking on the company repeating its first two years’ performance, that is.

From the day the Seattle-based coffee company went public June 26, 1992, there was - for two years - no holding it back.

The stock shot up 188 percent in a year.

It split two-for-one. On its second anniversary, the stock was up about 250 percent from the opening price.

Then it slowed to a crawl and began moving sideways instead of upward.

On Nov. 8, Starbucks traded at $28.75. By March 24, it had slid to $22.675. On Friday, it closed at $26.62, finally showing some live by climbing $3 in the last week.

Why has the stock gone nowhere fast despite glowing management reports and expansion plans?

Brian Howell, a Tacoma investment adviser and resident Starbucks stock fan, ascribes the stock’s sideways drift to a perception among investors that it is overvalued.

“I think a lot of people still look at it as a fad that might change at any time,” Howell says.

Dislocations in the coffee market and volatile exchange rates might have hurt the stock, too, he adds.

Some believe all those impressive earnings are already built into the stock price, Howell says. That is why the stock doesn’t react much when new earnings reports are issued.

He doesn’t expect the stock to show any dramatic gains in the near future - unless the company comes out with an unexpected increase in earnings.

“When people rediscover it, it should go back up,” Howell says.

Clubs outperform funds

Figures show investment clubs outperform mutual funds. What stocks are the clubs buying lately? The National Association of Investors Corp. has just released a list of the 15 top holdings:

McDonald’s, Merck, PepsiCo, Wal-Mart, AFLAC, AT&T, Motorola, Walt Disney, Coca-Cola, Abbott Labs, Rubbermaid, RPM, Sara Lee, General Electric and Intel.

While many of these stocks have zoomed into overpriced territory, others - notably Wal-Mart, PepsiCo and GE - seem good values for the long haul.