1. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 69
Already being the biggest coffee chain in the world, Starbucks Corporation (NASDAQ:SBUX) has no plans to stop! It has set out a goal to take its total tally of locations to 55,000 by the year 2030 from 38,000, as of 2024. On the other hand, it aims to increase its number of U.S. outlets from 16,352 currently to 20,000! A growth of 4% is expected for its net openings in the U.S. in 2024. It’s the fastest-growing fast-food chain in the U.S., as reported by one of the articles by Insider Monkey.
Thus, it’s safe to say that the analysts are putting their faith in the company’s goals, as 10 more hedge funds have taken up a stake in the company’s stock, taking the total tally to 69! These stakes translate into a value of a whopping $2.7 billion! Furthermore, Starbucks Corporation’s (NASDAQ:SBUX) stock is carrying a satisfying upside potential of 16%.
However, the Q2 2024 performance of the company was quite disappointing, summed up by Laxman Narasimhan, the company’s CEO:
“Our performance this quarter was disappointing and did not meet our expectations. Our Q2 total company revenue was $8.6 billion, down 1% year-over-year. Our global comparable store sales declined 4% year-over-year, driven by a negative 3% comp growth in North America, led by declining traffic and a negative 11% comp growth in China. Our global operating margins contracted by 140 basis points to 12.8%, and our overall earnings per share declined by 7% to $0.68. While these results do not reflect our strengths, our capabilities or the opportunities ahead, we confront these challenges from a position of enduring strength.”
However, the following is what Rachel Ruggeri had to say about how the company views the current situation:
“First, Q2 was a challenging quarter for us as headwinds consistently persisted throughout the quarter leading us to revamp our actions and response plans to both unlock and attract demand. Second, our triple shot strategy continues to deliver efficiencies even in the face of headwinds reinforcing that we have the right strategy at the right time. Next, our fiscal year 2024 guidance has been revised to reflect our Q2 performance, year-to-date results as well as the near-term headwinds we’re experiencing. We, however, remain confident in our long-term growth opportunity and thus, committed to our strategy and the related investments. And finally, our disciplined approach to capital allocation drives our financial fortitude, reflecting shareholder commitment underpinned by our best-in-class dividends.
This allows us, to preserve both balance sheet durability and flexibility, positioning us to successfully navigate this complex and dynamic environment.”
While we acknowledge the potential of Starbucks Corporation as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SBUX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
