Starbucks (SBUX) May Have Bottomed

Retail

Published: December 10, 2007 11:16 am

Normally, when McDonald’s (MCD) comes out with strong same-store sales and attributes some of its success to revenue from premium coffee, shares in Starbucks (SBUX) sell off.

MCD did just that, saying that global same-store sales were up 8.2%, which was more than most Wall St. analysts expected. McDonald’s stock moved up about 2% on the news to a new 52-week high over $61.

But, the report that premium coffee sales were part of the big food chain’s success did not hurt the Starbucks share price. It moved up about 1% to $22.84. That is still near a 52-week low, but at least the stock is not moving down.

What happened? Investors may assume that coffee consumption is simply up all over. Perhaps so many people go to work early that java sales are increasing for most chains. Could be.

Or, expectations for Starbucks may be becoming less spectacular. The company has lost over a third of its market cap as it has fallen from it one-year high of almost $37. Below $23, investors can be more forgiving.

Whatever the reason, it looks like Starbucks has bottomed.

Douglas A. McIntyre

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