Starbucks (SBUX)

A company that he has always admired. Had a little hiccup a few years ago when Howard Schultz exited, but he has since returned, a great manager who represents the company very well. This trouble has always been valuation, trading in the high 20s in terms of market multiple, which is a little bit too rich for him.

The valuation was pretty excessive, and now you’ve had a couple of quarters where they’ve missed the numbers a little. They still have the global expansion in play. You are paying a multiple in the high 20’s and growth is slowing down a little. He wouldn’t be throwing new money at this.

(Market Call Minute.) A good company. A lot of potential international expansion, but it is pricey. Wait for a pullback before adding.

She likes it a lot. It has been such a momentum stock. The big thing is that it is like MacDonald’s 20 years ago and is rolling out around the world. She likes their international strategy and thinks it is a stock to own for the next 10 years.

Some of the more growthier type names have been sold down. This one has a tremendous loyalty program. Has done quite well in China. It is one you can buy and tuck away for ever.

Visa (V-N) or Starbucks (SBUX-Q)? A hard choice, because they are both wonderful, wonderful companies. On this one, you get the retail and the wonderful loyalty of people. It has never been cheap and may never be on earnings multiples, because it is such a good business to be in. They will be generating free cash flow to the end of time. He is still sitting on the fence on this. 1.5% dividend yield.

Has owned this for some time, but has been noticing in the larger growth type of names, they are starting to move sideways. He is watching this very closely. Valuations are higher for these types of names. Trading at 29X forward earnings, so there could be a shift from growthier types of names to more value oriented types of names. Still a name he likes, but he would watch it very closely for the next little while. If it starts to break down even further, then he would want to take some profits off the table.

(Market Call Minute.) This is a Sell, but only on a valuation basis. Loves management and thinks they are executing very well, but is trading at close to 30X earnings.

Even though this is consumer discretionary with a lot of those names struggling, because of their customer base tending to be well off, she sees this doing well and being less hit by any type of contraction of the overall market. Right now they look to be of pretty good value. Could see a possible 15%-20% upside over the next year.

A leader for high-end coffee. They are a global company. Have had 25% consecutive quarters of comp growth above 5%. In the fiscal 2^nd quarter that they just reported, they had 18% earnings growth and 9% revenue growth. A high multiple stock, probably trading in the mid-20s. On a pullback of 10%, this would definitely be a buy.

Anything can happen in one month. In 5 years he believes they will be selling more stuff in more stores than today. What is holding him back is valuation. It is expensive, but has never been cheap. He is looking at it. He needs it 10% cheaper.

Valuation has always scared her. A lot of good stuff has already been factored in. This is an example of a lot of great things happening with the company. Really likes their innovative management, rolling out technology in a coffee shop.

A premier name and doing very well. Getting into baked goods and the juice area. They are expanding their offerings and doing very well with mobile. Customer loyalty program remains pretty strong. There is international expansion going into China, etc. However the chart is starting to roll down a little and its momentum is starting to slow down. He is keep an eye on that. Trading at 26X forward earnings, which represents a growth company. (Early on this year value companies are starting to outperform growth stocks.)

He would be hesitant to go in and buy it here. He thinks they had a bit of a miss last quarter. It is a problem with valuation. The easy money has been made.

Quite expensive, trading in the high 20s on a P/E valuation. Have done a fabulous job. Feels the real catalyst is China. They are moving around the world opening up businesses that are very effective. With online shopping, mall traffic is starting to drop which worries him a little. However, same-store sales have been robust. He doesn’t want to pay up for future growth which is already built-in and is less than guaranteed.