Should You Invest in Starbucks Corporation (SBUX)?
ClearBridge Investments, an investment management company, released its “ClearBridge Large Cap Growth Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, increased volatility was caused by weak employment reports, leading to a brief correction in parts of the U.S. equity market. However, after a 50 basis point interest rate cut by the Federal Reserve, stocks rallied, with the S&P 500 Index rising by 5.89% and the small-cap Russell 2000 Index jumping by 9.27%. Leadership in equities broadened beyond the Magnificent Seven companies. In the quarter, profit-taking among large-cap companies and early signs of a possible market rotation caused growth stocks to underperform value stocks. The benchmark Russell 1000 Growth Index increased by 3.19%, falling behind the Russell 1000 Value Index, which saw a growth of 9.43%. The strategy outperformed in the quarter driven by broader participation among stable and cyclical growth positions in health care, communication services, and industrials. In addition, please check the fund’s top five holdings to know its best picks in 2024.
ClearBridge Large Cap Growth Strategy highlighted stocks like Starbucks Corporation (NASDAQ:SBUX) in the third quarter 2024 investor letter. Starbucks Corporation (NASDAQ:SBUX) is a global coffee brand that roasts, markets, and sells coffee. The one-month return of Starbucks Corporation (NASDAQ:SBUX) was 4.84%, and its shares gained 2.92% of their value over the last 52 weeks. On October 3, 2024, Starbucks Corporation (NASDAQ:SBUX) stock closed at $95.56 per share with a market capitalization of $108.289 billion.
ClearBridge Large Cap Growth Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its Q3 2024 investor letter:
"Similarly, we took advantage of a business reset at Starbucks Corporation (NASDAQ:SBUX) in the third quarter to initiate a position in the global coffee retailer. A confluence of factors, including degraded store-level operations and long consumer wait times, consumer fatigue with high prices and weakening engagement among occasional Starbucks customers has led to declining U.S. same-store sales growth. While the path ahead will likely require reinvestment back into the business, there are many merits to Starbucks’ business including its strong brand name and category leading market position. In response to recent challenges, Starbucks has appointed change-agent CEO Brian Niccol, who we know from the Strategy’s ownership of Chipotle Mexican Grill during its turnaround. Niccol has a successful track record of investing in product innovation and fixing execution issues, which we believe are the primary challenges facing Starbucks today. Starbucks represents the kind of successful playbook we have executed on historically – focusing on high-quality businesses and brands while being disciplined around the entry point into investments with attractive risk-reward opportunities."
A barista pouring freshly brewed coffee from an espresso machine to a cup in a bustling cafe.
Starbucks Corporation (NASDAQ:SBUX) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 70 hedge fund portfolios held Starbucks Corporation (NASDAQ:SBUX) at the end of the second quarter which was 69 in the previous quarter. Starbucks Corporation’s (NASDAQ:SBUX) revenue in the third quarter of fiscal year 2024 was $9.1 billion, reflecting a 6% increase over the previous quarter. While we acknowledge the potential of Starbucks Corporation (NASDAQ:SBUX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Starbucks Corporation (NASDAQ:SBUX) and shared the list of stocks Jim Cramer is talking about. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.