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Starbucks Stock Jumps 20% After CEO Shakeup: Should US Investors Hold or Buy?

I came across a hold thesis on Starbucks on SA from Uttam Dey. In this article, we look at how Starbucks shares experienced a 20% jump followed by the announcement of a change in CEO after a decline in comparable-store sales for a second consecutive quarter. Starbucks shares were trading at $95.9 when this thesis was published, vs. closing price of $91.15 on September 6, 2024.

Starbucks Corporation is an American multinational chain of coffeehouses attributed to brewing the foamiest coffee and introducing a wide variety of coffee experiences. It is headquartered in Seattle, Washington, and has 38,038 stores in 80 countries. The company serves hot and cold coffee drinks including whole bean coffee, espresso, micro-ground instant coffee, caffe latte, full and loose-leaf teas, Frappuccino beverages, juices, snacks, beverages, pastries, and snacks.

SBUX seemed to have faced severe challenges under the leadership of CEO Narasimhan as the company’s quarterly performance went from bad to worst. The most recent FY24 quarter illustrates that Starbuck’s total sales went down to $9.1B, declining 0.6% y/y. This was the worst revenue performance in the 10 years of Starbucks operating history excluding the 2020 pandemic lockdowns that created demand-supply distortion. Declining sales were followed by a contraction of the coffee house’s operating income by 5.1% to $1.5B in Q3.

After the sales slump, the company decided to replace the CEO with Brian Niccol, and shares jumped more than 20% following the announcement. However, despite the record one-day jump a lot of financial nightmares await the new CEO. Despite the financial losses, the dividends have been consistent at $0.57 since 2023 and an annual dividend of $2.28 per share offering secured dividend payments to investors even with reducing profits. The company still faces pressure by activists and falling sales, a turnaround in the company’s financial situation may take 1-2 quarters which gives an ample opportunity to buy into the stock. We think it is still too early to buy, especially if the US economy goes into a recession.

SBUX is not on our list of the 31 Most Popular Stocks among Hedge Funds. As per our database, 70 hedge fund portfolios held SBUX at the end of the second quarter which was 69 in the previous quarter. While we acknowledge the potential of SBUX as an investment, 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 as promising as SBUX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: Unilever PLC (UL): A Bullish Thesis and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article was originally published at Insider Monkey.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

The whispers are turning into roars.

Artificial intelligence isn’t science fiction anymore.

It’s the revolution reshaping every industry on the planet.

From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards.

Here’s why this is the prime moment to jump on the AI bandwagon:

Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.

Imagine every sector, from healthcare to finance, infused with superhuman intelligence.

We’re talking disease prediction, hyper-personalized marketing, and automated logistics that streamline everything.

This isn’t a maybe – it’s an inevitability.

Early investors will be the ones positioned to ride the wave of this technological tsunami.

Ground Floor Opportunity: Remember the early days of the internet?

Those who saw the potential of tech giants back then are sitting pretty today.

AI is at a similar inflection point.

We’re not talking about established players – we’re talking about nimble startups with groundbreaking ideas and the potential to become the next Google or Amazon.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.

This isn’t just about making money – it’s about being part of the future.

So, buckle up and get ready for the ride of your investment life!

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China’s terrifying internet “Master Key”… and the one microcap that could stop them

In August 2024, news outlets around the world revealed one of the most shocking data breaches in recent history.

Approximately 2.9 billion records, including names, email addresses, phone numbers, mailing addresses, financial data and, distressingly, Social Security numbers, were stolen when Coral Springs, Florida, firm National Public Data (NPD) suffered a massive cyberattack. The company confirmed that the breach, which happened in December 2023, resulted in the potential leaks of data in the summer of 2024.

Nearly every day in the news, we hear about yet another damaging data breach or ransomware attack that puts valuable data — including yours — into the hands of hackers. And the number of attacks is soaring — up 30% year over year according to the latest numbers.

As bad as this is, it’s a day at the beach compared to what’s coming.

That’s because hostile nations across the globe — including Iran, North Korea, Russia and Communist China are going all-out to develop a breakthrough technology that will unlock what I call the “Master Key” to the Internet.

If they succeed in harnessing this groundbreaking “Master Key” technology, the consequences could be catastrophic.

Click to continue reading…