1. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 76
Starbucks Corporation (NASDAQ:SBUX) is a multinational chain of coffeehouses that specializes in a wide range of coffee beverages. The stock had been underperforming until August when it unexpectedly surged following a surprise leadership change. In August, the company appointed Brian Niccol as its new CEO, and immediately after the announcement, Starbucks’ shares rose by over 20%. The stock is up by nearly 10% year-to-date.
In fiscal Q4 2024, Starbucks Corporation (NASDAQ:SBUX) reported revenue of $9.07 billion, down by 3.2% from the same period last year. Its operating cash flow for the quarter came in at over $6 billion. The company opened 722 net new stores in Q4, bringing its total store count to 40,199 by the end of the period, with 52% being company-operated and 48% licensed. ClearBridge Investments appreciated Starbucks Corporation (NASDAQ:SBUX) on its strong business model in its Q3 2024 investor letter. Here is what the firm said:
“Similarly, we took advantage of a business reset at Starbucks Corporation (NASDAQ:SBUX) in the third quarter to initiate a position in the global coffee retailer. A confluence of factors, including degraded store-level operations and long consumer wait times, consumer fatigue with high prices and weakening engagement among occasional Starbucks customers has led to declining U.S. same-store sales growth. While the path ahead will likely require reinvestment back into the business, there are many merits to Starbucks’ business including its strong brand name and category leading market position. In response to recent challenges, Starbucks has appointed change-agent CEO Brian Niccol, who we know from the Strategy’s ownership of Chipotle Mexican Grill during its turnaround. Niccol has a successful track record of investing in product innovation and fixing execution issues, which we believe are the primary challenges facing Starbucks today. Starbucks represents the kind of successful playbook we have executed on historically – focusing on high-quality businesses and brands while being disciplined around the entry point into investments with attractive risk-reward opportunities.”
On October 23, Starbucks Corporation (NASDAQ:SBUX) declared a 7% increase in its quarterly dividend to $0.61 per share. This was the company’s 14th consecutive year of dividend growth. Moreover, the company has been making regular dividend payments for the past 58 consecutive quarters. The stock’s dividend yield on November 24 came in at 2.38%.
Insider Monkey’s database of Q3 2024 showed that 76 hedge funds owned stakes in Starbucks Corporation (NASDAQ:SBUX), up from 70 in the preceding quarter. The collective value of these stakes is over $3.25 billion.
Overall, Starbucks Corporation (NASDAQ:SBUX) ranks first on our list. While we acknowledge the potential for SBUX to grow, our conviction lies in the belief that some 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: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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.
