Surviving A Falling Starbucks
I really want to own Starbucks. I really want to put the stock in my portfolio, but nowadays, I just can't justify it. Maybe when it drops to $15 next March, I will scoop some up.
Sure, I am still trying to beg, steal and borrow for my "$300" latte' when the temperature is not 100 degrees, but since we are clearly at the end of an economic expansion, companies like Starbucks (p/e 48) will more than likely continue to see their sales lagging forecasts. If I had a long position here, I would be loading up on puts.
There is an interesting report out today - check out MSN - about Starbucks' (symbol SBUX) sales figures and the problems they have been having etc. But what is interesting to me was the suggestion that there is this "pullback" on consumer spending. Oh, really? I think it's called inflationary pressures.
Anyway, expensive coffee, high operating costs - everyone gets full medical benefits at Starbucks by the way - , long waits and no dividends to stockholders....that tells me that I am going to sit this one out.
If you dump your Starbucks stock, there are some ideas out there.
If you are looking for yield in this climate (no pun intended), Bank of America pays a handsome 4.35% dividend yield, roughly $0.56/shr per quarter. If you need to be liquid and your local bank doesn't want to give you more than 2% on your money, then consider some of the online outfits. ING is giving me 4.35% on my savings account! And guess what? I don't have to stand in a line and be ignored by some 22 year old snob! The rate I am gettng is only 61 basis points lower than than 10 year Treasury!
Sure, I am still trying to beg, steal and borrow for my "$300" latte' when the temperature is not 100 degrees, but since we are clearly at the end of an economic expansion, companies like Starbucks (p/e 48) will more than likely continue to see their sales lagging forecasts. If I had a long position here, I would be loading up on puts.
There is an interesting report out today - check out MSN - about Starbucks' (symbol SBUX) sales figures and the problems they have been having etc. But what is interesting to me was the suggestion that there is this "pullback" on consumer spending. Oh, really? I think it's called inflationary pressures.
Anyway, expensive coffee, high operating costs - everyone gets full medical benefits at Starbucks by the way - , long waits and no dividends to stockholders....that tells me that I am going to sit this one out.
If you dump your Starbucks stock, there are some ideas out there.
If you are looking for yield in this climate (no pun intended), Bank of America pays a handsome 4.35% dividend yield, roughly $0.56/shr per quarter. If you need to be liquid and your local bank doesn't want to give you more than 2% on your money, then consider some of the online outfits. ING is giving me 4.35% on my savings account! And guess what? I don't have to stand in a line and be ignored by some 22 year old snob! The rate I am gettng is only 61 basis points lower than than 10 year Treasury!
posted by Blueshift2 at
Wednesday, August 02, 2006
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