SBUX Hits Key Support – Is This The Buying Opportunity?
Starbucks (SBUX) should be on your watchlist. Here is why – it is currently trading in the support zone ($78.00 – $86.22), levels from which it has bounced meaningfully before. In the last 10 years, the stock received buying interest at this level 6 times and subsequently went on to generate 20.9% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 11/12/2020 | 14.4% | 49 |
| 1/29/2021 | 31.3% | 178 |
| 9/14/2022 | 25.6% | 229 |
| 8/20/2024 | 10.9% | 94 |
| 12/23/2024 | 33.2% | 67 |
| 4/9/2025 | 10.1% | 104 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For SBUX Read Buy or Sell SBUX Stock to see how convincing this buy opportunity might be.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Separately, consider what could long-term performance for your portfolio be if you combined 10% commodities, 10% gold, and 2% crypto with equities.
Here are some quick data points:
- Better Value & Growth: CMG, YUM Lead Starbucks Stock
- CMG, YUM Look Smarter Buy Than Starbucks Stock
- Starbucks Is Slipping in 2025. Is a Deeper Drop Ahead?
- Better Value & Growth: CMG, YUM Lead Starbucks Stock
- Pay Less, Gain More: CMG, YUM Top Starbucks Stock
- Better Value & Growth: YUM, QSR Lead Starbucks Stock
- Revenue Growth: 0.6% LTM and 4.7% last 3 year average.
- Cash Generation: Nearly 6.1% free cash flow margin and 10.5% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for SBUX was 0.6%.
- Valuation: SBUX trades at a PE multiple of 35.4
- Opportunity vs S&P: Compared to S&P, you get higher valuation, lower revenue growth, and lower margins
Starbucks operates as a roaster, marketer, and retailer of specialty coffee, offering beverages, roasted beans, single-serve, and ready-to-drink products through thousands of global stores.
| SBUX | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Restaurants | – |
| PE Ratio | 35.4 | 23.9 |
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| LTM* Revenue Growth | 0.6% | 5.2% |
| 3Y Average Annual Revenue Growth | 4.7% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 0.6% | -0.1% |
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| LTM* Operating Margin | 10.5% | 18.6% |
| 3Y Average Operating Margin | 13.3% | 17.8% |
| LTM* Free Cash Flow Margin | 6.1% | 13.3% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, Starbucks isn’t immune to big drops. It fell nearly 50% in the Dot-Com crash and took a harder hit, about 80%, during the Global Financial Crisis. The 2018 correction and Covid dip still wiped out around 23% and 40%, respectively. Even the recent inflation shock dragged it down close to 44%. Strong fundamentals help, but when volatility hits, this stock can still get hit hard.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read SBUX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.