Starbucks Corporation (SBUX): A Perfect Investment Opportunity?

Wal-Mart has tied up with Bharti group, and is currently awaiting the introduction of goods and services tax before planning full scale expansions. The retail giant reported a net margin of 8.6% in the holiday quarter, but received a neutral rating from JPMorgan. According to Wal-Mart, the rise in taxes, deterred people from shopping in the holiday season which eventually hurt its sales. The outlook remains weak, because Wal-Mart caters to the poor and middle classes, which are experiencing a financial crunch due to rising natural gas and petroleum prices.

J.C. Penney is however operating with an online retail store in India, but its premium pricing has been the center of its problems. Last month, UBS downgraded J.C. Penney stating that holiday season sales could be weaker than expected, and doubted its ability to open new stores on schedule. UBS set a price target of $13 per share for J.C. Penney. Going a step further, Moody’s Investor’s Service downgraded the company to junk grade status, stating that “it will take a big hit as a result of the need to clear excess inventory.”

But Starbucks seems to be the perfect stock. Its debt/equity stands at a mere 11% and the company currently enjoys an ROI of nearly 25%. It’s acquisition of Teavana and subsequent expansions in India are a huge positive for the company. The street was already impressed by 452 new store openings last year, and the 1,300 new openings scheduled for this year, could present a blockbuster year for the coffee giant. I think Starbucks is worth a buy rating.

The article A Perfect Investment Opportunity? originally appeared on Fool.com and is written by Piyush Arora.

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