This story was originally published here.
Starbucks (NASDAQ:SBUX) is back in the black. After a decline that reached over 40% at March lows, Starbucks stock now is up 3% so far in 2020.
To some investors, the rally might not make much sense. After all, Starbucks has taken a big hit from the novel coronavirus pandemic, which closed stores worldwide and pressured traffic. There are long-term concerns as well.
But I’m not one of those investors. Indeed, I’ve recommended Starbucks stock since those dark days in March, and I’m not backing off that call now. Starbucks remains one of the world’s great consumer companies, and there’s simply a lot to like when it comes to SBUX stock.
With fiscal fourth quarter earnings arriving on Thursday morning, I expect more investors will come around to the long-term bull case here. And that means the rally in Starbucks stock likely is closer to the beginning than to the end.
The Case Against Starbucks Stock
Despite the big rally from March lows, Starbucks stock hasn’t had a great 2020. In fact, the stock has modestly underperformed the S&P 500.
There are reasons why an investor would expect that to be the case. Again, Starbucks took a hit from the pandemic. Stores were closed in China, the U.S., and Europe. Traffic has been weak even as locations have reopened. Revenue in the fiscal third quarter (which ended June 28) declined 38% year-over-year. Starbucks posted a significant operating loss in the quarter, even on an adjusted basis.
The worries aren’t just short-term, either. “Work from home” seems like a significant long-term effect of the pandemic. Presumably, some consumers that stopped at Starbucks on their way to (or from) the office no longer will do so.
Then there’s valuation. Starbucks stock trades at 33x forward earnings. That’s an above-market multiple for a stock that seems to have a few very real risks.
Surely, the rally in SBUX has to be near an end, right?
Not so fast…
Story continues here.
Dump America’s Most Popular Brand NOW
During times of great volatility, investors often cling to what they’re familiar with… including the stocks of companies they know best.
Fear and conventional wisdom push people to the biggest brands.
But what if I told you that America’s top stock picker — a man with 40 recommendations that have gained at least 1,000% in his career — believes that America’s most popular brand is a “must sell” right now?
Because this giant of the past was doomed with or without the fear of a pandemic. Eric believes it’s one of 25 big-name stocks that are going to experience hard times, even if a coronavirus cure is found tomorrow.
And, remember, Eric is the legendary trader that accurately predicted the collapse of more than 70 stocks. That includes Cisco (fell 75% in a year after his prediction), Tyco (fell 74% in the year after his prediction), and Countrywide Financial (fell 87% in the two years after his prediction).
Instead, Eric believes anyone with money in the market should focus on four companies that are in position right now to help people capture huge market gains.
You probably haven’t heard of a single one of these firms…
But you will.
Get the facts for yourself and be one of the first to learn more about the four stocks you should buy right now… as well as the 25 companies you should sell immediately, on our website, here…
P.S. Tune in to this video presentation now, while it is still available, and Eric will reveal what he believes will be his next 1,000% winner. The name, the ticker symbol, and why it’s such a screaming buy… it’s all in Eric’s presentation and FREE to view. Just keep in mind, this valuable information won’t be up on our website forever.