Without anyone noticing, Starbucks (SBUX) has dropped from an intraday price of $40 on November 16 to $32.40 today. That’s a lot in less than three months, especially for "growth" stock.
Obviously, there are a lot of people on Wall St. who don’t think that it can keep up same-store sales growth rates of 6% and hit that magic 40,000 store goal sometime in the distant future.
The well may be poisoned by all the news that McDonald’s (MCD) have become a larger and larger force in breakfast and premium coffee. Looking back over a three month period, MCD is up about 7% and SBUX is off about 15%.
Using the old Peter Lynch method of testing and examining the products and services of the companies behind stocks he would buy, a couple of notable things with Starbucks are that the waits are getting longer and the places to sit are getting more crowded. It’s bad news disguised as good news.
If same store sales don’t take another solid tick up in the early months of 2007, Starbucks may have further to fall.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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