Starbucks (SBUX-Q)

Still a core holding. Turnaround well underway with new CEO. Looking for earnings to stabilize this year, and go up 30-40% in 2026.

Going back to basics. In only 6 months, new CEO has put his stamp on the business. Should be back to double-digit growth next year. Early stages of a turnaround. Incredible franchise. Because people put $$ on their SBUX apps (to the tune of ~$3B), it's making money off this float just like a bank.

Focus includes getting orders through much faster, but creating a better and more welcoming atmosphere. So much about the retail experience today is about the vibe.

They changed the CEO last summer, one of the best in fast food (did a great job at Chipotle). The CEO is improving through-put, will restore the coffee house vibe, and wants to add 10,000 locations in the US alone. You're betting on the CEO.

Biggest change is new CEO. Above 200-day MA since last August, now near 52-week high. Slow pandemic recovery in China. Premium of 36x forward PE, with 9% growth -- well over 3.5x PEG. Bit overbought at 80 RSI, take some profit.

Up 18% last month after a beat. He has faith in the new CEO.

It reports Tuesday. Maybe buy it after the conference call. The new CEO did a great job to turn around Chipotle.

Wild ride, ups and downs. 200-day MA is still declining to flattening, not the most positive sign. Sluggish China impacted performance, uncertainty still there. Trying to enhance efficiencies and revenues. Positive earnings growth won't be until next year. 30x forward PE.

The shares are overprices and (some say) the coffee is mediocre. In the last 10 years, the competition has really increased. Too rich.

Buy on this pullback. This was down 13% in 2022, and 2% in 2023 and another 2% this year. It's rare for SBUX to be down three straight years. We'll know when they report Jan. 28 if the turnaround is working. They will do $1 billion in revenue, -1% YOY, $1.12 billion in EBIT or -23% YOY. Analyst expectations are very low. Shares are trading at their 10-year median valuation. They just hired the best QSR CEO who will turn things around. At $80-65, he will add a lot more shares.

Shares are up 27% after they changed CEOs, but some analysts aren't sold. Bears say turnarounds take time and are expensive, and earnings estimates need to come down. He agrees with the bulls who feel that operating margins will improve, though earnings estimates need to come down. He has a large position, but hasn't sold a share on the CEO news. He expects either flat or weak earnings next year, but is willing to hold on as long the company comes out better the following year.

Technically, great that it's broken above the 200-day MA, but that's still trending lower. Stock's gapped up. On his watchlist. Concerns about China, its second-largest market.

Investors should be cautious about the new-CEO effect. They need to execute. Stock moving higher is a hope for execution. Not cheap at this point, 2.9x PEG.

Debt levels are very high at the moment (~$15 billion). Capital allocation has not been very strong. Too many new CEO's lately. Would not recommend investing at this time. Better options for investors out there. 

US store traffic is weakening while it's gotten more competitive in China, so weak there. They just got the Chipotle CEO, so shares just popped chase it, but will wait.

Would take a profit on the trade. Short-term, a new CEO doesn't change the fundamental story, maybe long-term. The problems are a saturated market and the consumer is watching their pennies.