3. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Investors: 70
Jim Cramer recently discussed Starbucks Corporation (NASDAQ:SBUX) in response to a viewer’s question. He affirmed that Starbucks Corporation (NASDAQ:SBUX) is a good buy but advised patience. Cramer praised Brian Niccol, the new CEO who previously led Chipotle Mexican Grill, Inc. (NYSE:CMG), highlighting his impressive leadership qualities.
“Yes, Starbucks is a buy. Look, you’ve got to be a little more patient. Brian Niccol, who’s come from Chipotle, is fabulous. Will it go straight back to 100? No. Will it go to 92, 88? Now, it’s never going to be the same because Brian Niccol is that fabulous. CEOs matter. We tend to treat them as if they’re all the same—they’re not. Niccol’s the real deal. I like what he’s going to do.”
Despite facing a challenging Q2 2024, where Starbucks Corporation (NASDAQ:SBUX) experienced a 2% decrease in net revenue to $8.6 billion and a 4% drop in global comparable store sales, the company’s core strengths and strategic initiatives point to a positive outlook. Starbucks Corporation (NASDAQ:SBUX)’ strong brand and commitment to customer loyalty are reflected in a 6% increase in U.S. Starbucks Rewards memberships.
Starbucks Corporation (NASDAQ:SBUX)’s “Reinvention” plan, which includes opening 364 new stores and focusing on sustainability, positions it well for recovery and future growth. In addition to these efforts, Starbucks Corporation (NASDAQ:SBUX) has made several strategic moves to enhance its market position. The new partnership with Nestlé to introduce Starbucks-branded coffee capsules in emerging markets will broaden its global footprint. Starbucks Corporation (NASDAQ:SBUX) is also improving its digital platform to provide more personalized experiences through its mobile app.
Starbucks Corporation (NASDAQ:SBUX)’ investment in sustainability, with a target to reduce its carbon footprint by 50% by 2030, aligns with increasing consumer demand for environmentally friendly practices. These factors, combined with Starbucks Corporation (NASDAQ:SBUX)’ strategic expansion and strong brand loyalty, underscore its potential for future growth and make it an appealing investment opportunity.
Diamond Hill Select Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its Q2 2024 investor letter:
“Starbucks Corporation (NASDAQ:SBUX) is the global leader in the coffee industry. Given its significant scale, we believe Starbucks can maintain its average ticket growth and drive decent traffic growth, which should allow for some margin expansion. While macroeconomic and competitive pressures remain intense in China, the country accounts for a minimal percentage of today’s earnings, and we believe the current valuation embeds little to no contribution from China over the long term, which we view as too cynical. As the share price declined recently amid near-term concerns surrounding store sales in North America and China, we capitalized on what we considered an attractive entry point.”
