Jim Cramer’s Hottest 10 Stock Picks

8. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Investors: 69

Starbucks Corporation (NASDAQ:SBUX), a top global coffee brand, is set for strong growth thanks to its loyal customers and solid financial results, including a 10% revenue increase from last year. Starbucks Corporation (NASDAQ:SBUX) is expanding in the U.S. and internationally by opening new stores and increasing its market presence. Starbucks Corporation (NASDAQ:SBUX) attracts new customers and encourages repeat business with its innovative drinks, seasonal offerings, and varied food menu. Its focus on sustainability and social responsibility also appeals to consumers who value ethical practices, enhancing its brand image and supporting its long-term success.

Jim Cramer observed that many restaurants deny their price hikes have hurt sales or resist lowering prices. He highlighted Starbucks Corporation (NASDAQ:SBUX) as an example, noting that while the company provides good deals for reward members, it struggles to attract new customers due to the lack of affordable entry-level options.

“Many of the restaurants have asserted that their price increases haven’t really hurt sales or in some cases refuse to admit that they need to roll them back. Starbucks gives good deals to its rewards members but they can’t seem to get new people to join. I think that’s because there’s no entry-level coffee offering with a low price to get people in the door. They don’t want to go there. Is anyone in the industry obtuse and in denial? No.”

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.”