Starbucks Corporation (SBUX) displays strong global growth potential and strong financial characteristics in above-average rates of growth, a high-quality profile, strong cash flow generation, pricing power and repeat revenues, says George P. Fraise, Portfolio Manager at Sustainable Growth Advisers.
“It offers a product which is consumed around the world in a format which is an aspirational format for consumers. And it has been able to grow very rapidly both domestically, but importantly, increasingly outside of the United States to capture an opportunity which the company is still in the early innings of capturing outside of the U.S.,” Fraise said.
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Fraise says SBUX‘s main product is already interwoven in the lives of millions of people worldwide, and the nature of the product already leads to strong profit margins and repeat purchases, and there are large areas of the world that remain underpenetrated.
“Its financial strength comes from the strong balance sheet, strong cash flow generation, and management strength that continues to come through the vision and the direction that Howard Schultz and the rest of the management team have put in place. So Starbucks is a good example of a U.S.-based company that meets our strict investment criteria, has been a high-performing business recently and is a stock that we’ve done well with for shareholders over the long term,” Fraise said.
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