This year has been rough for Starbucks stock (NASDAQ: SBUX) so far. Its year-to-date value still remains down more than 25 percent despite recent signs of life. However, that doesn’t mean you should avoid it.
Many experts believe Starbucks stock is currently undervalued and it represents a great deal at its current price of $87.12. While it might continue struggling this year and perhaps in 2023, it’s expected that the shares will see a significant long-term increase.
The reason why Starbucks is worth buying is the strength of its brand. The Starbucks brand is synonymous with coffee and it has loyal customers that will keep coming back no matter what. Also, the company has plans to hit 55,000 locations by the end of the decade, which would position it as one of the biggest restaurant chains by store count in the world.
But perhaps the most important encouraging sign was how the company handled the coronavirus pandemic. While many businesses are still recovering from its effects, Starbucks emerged largely unscathed. Moreover, the projections are that they will remain profitable and keep a healthy cash position, which is something investors don’t tend to disregard when evaluating the long-term outlook.
A number of factors caused Starbucks stock’s downward trajectory. Arguably the most important ones are tied to the uncertainty that surrounds the company at the moment. For one, Starbucks CEO Kevin Johnson is retiring soon and changes at the helm can always go either way. Then there are unionization efforts brewing across the nation that the company can’t ignore for much longer. Another important element is Starbucks’ struggle to have a speedy recovery in China.
