There are hidden risks for investors buying Starbucks at this point

One stock research firm estimates that Starbucks would have to boost revenues nearly 25% a year for the next ten years and improve returns on capital by 30% to justify its current stock price. Starbucks shares now sell for 52 times the company's earnings for the past 12 months, making the stock slightly more expensive than Google, which trades at 51 times trailing earnings. (CNNMoney.com)

Comments

[HopkinsBella]

Many economists seem to be playing the "overvalued" card as of late with virtually all companies, since the Dow made it over 12,000. Similar to what did and didn't occur with NASDAQ five or so years ago. It's a legit question regarding Starbucks to me, as I really don't think some of their long-term expectations are realistic. The company could prove me wrong, though.

[Barista Boy]

I remember hearing in '93-94 that Starbucks was the short sell stock of the decade--that it couldn't continue its rapid pace. I also remember hearing it in 95...96...97...98...etc.

[Barista]

So what are the hidden risks?

[Boston Starbucks Rebel]

I will remind all Starbucks partners that we are not allowed to give any financial advice concerning the financial status and future. We are under a legal obligation not to do so. Please refrain from providing any financial advise concerning this matter. We at this time have no comment at this time and merely concerned in providing the best cup of coffee to the world. Thank you.

I think your "advice" there buddy is a lil too little a lil too late and a lil(understatment) misinformed....please please please try and stop people from "giving any finacial advice" As a fellow partner by NO MEANS AM I UNDER LEGAL OBLIGATION TO DO SO" ...the in house laywers I know have NO clue where you are coming from...uh this is a public fourm....it can not be monitored and people cannot be persecuted...even if partners were "giving finacial advice"(what does that mean??) it's protected, and as many contributions that you have posted on this website..it would seem that you would know this. Please refrain from portraying our comapny in such a negative and false manner to the general public. Thank you.

anybody placing a trade on starbucks stock based solely on financial data posted on this message board deserves their fate.

Starbucks slightly more expensive than Google? Starbucks is WAY more expensive than Google if you compare Google's past and projected growth rates to Starbucks. Google's high PE ratio is justified by its explosive growth rate (no it can't continue forever) at least when compared to Starbucks. Making an entry into Starbucks at these levels comes with a lot of risk. Wait for a pullback

[StarbucksInvestor]

I don't work for Starbucks so I can talk about the stock!

I have been hearing its overvalued since I bought my first shares in 1993. But hey, I could have bought Boston Chicken instead!

Good companies will always be overvalued. The analysts just want to talk the stock down so their other departments can buy it.

Besides, if you do any research at all about investing in general, you realize the analysts know nothing, and can't possibly know anything without violating insider trading rules. So their advice is worth what you paid for it $0.0