Since 2009, Starbucks’ (SBUX, Financial) shares have appreciated by over 1,200%, which is impressive no matter how you look at it. Despite the quadruple-digit growth, I still think Starbucks is a buy. Starbucks is one of the stocks that I would recommend investors never to sell. The company has a great business model and is still witnessing strong growth. Starbucks still has a lot of potential in the international markets, which is why it should deliver more upside in the coming years.
The company’s revenue-driving initiatives have been well received as evident by the company’s sales growth in all of its major markets. Starbucks is known for innovations and improving customer experience, and these factors have resulted in a good increase in comps. Starbucks’ Mobile Order and Pay initiative has been highly successful in America.
One of the main growth drivers of Starbucks is its mobile platform in the U.S. The company recently detailed that it comprises of more than 13 million mobile users and making approximately 7 million mobile transactions per week.
The company introduced its Mobile Order and Pay feature at 4,000 stores and believes that it had a direct impact on its traffic expansion as it is easy for clients to order and pay for drinks. The Starbucks app enables users to place their order before reaching the outlet, which ultimately results in lesser waiting time and shorter queues. The company is slowly rolling out this feature across the U.S.; given the success of its initial rollout, I have no doubts that this initiative will boost Starbucks' comps going forward. Once again, the company has shown that it can pave the way for future growth by enhancing customer experience and innovations.
The company observed customers' rapid and accelerating adoption of Mobile Order and Pay feature for each new segment it rolls out and recently announced plans to roll out this feature across Canada as well. Although it’s just starting, Mobile Order and Pay is only available for iPhone users, but the company will soon launch it for Android users.
Valuation
Starbucks may be trading at a premium, but the company totally deserves it. Starbucks has one of the best business models in the industry and still has a lot of room for expansion. The stock is trading at 35x trailing earnings, and I expect it to continue growing sales and earnings in the foreseeable future.
Conclusion
Starbucks is all set to roll out its Mobile Order and Pay program across the entire United States. Given the success of the company’s Mobile Order and Pay program, the rollout across the U.S. should lead to a massive increase in customer traffic and comps. The company’s earnings report is due this month, and another blowout quarter seems likely. All things considered, few negatives can be seen. Starbucks is a buy at present levels.
