Twenty years ago Starbucks (NASDAQ:SBUX) successfully built a chain of uniformly well-known coffeehouses. However, the prospect of becoming one of the most prolific food and beverage establishments in the world seemed remote at the time.
We now know that was exactly what was in the cards. The number of stores went from then to almost 39,000 stores at the end of March, and quarterly revenue has grown from about $1 billion to $8 billion.
Investors who were able to recognize its growth potential have of course been amply rewarded for their patience.
What a party! Being in the right place at the right time!
Starbucks is much older than twenty years, for the record. The first store was opened in 1971 and it took several years before growth really started.
In retrospect, the company peaked at a perfect time. From the mid-1980s through pre-pandemic 2019, consumers around the world—and particularly in the United States—were making shopping and eating and drinking outside the home more common. Starbucks delivered a premium product that those people wanted, where they wanted it. No other organization was willing or able to do the same.
Bottom line for investors? Just since mid-2004, Starbucks stock has risen from a price of nearly $10.80 to its current value of just over $79 per share. A $1,000 investment in the company would be worth about $7,300 today.
Don’t expect Starbucks stock to repeat this performance
Consumers still pay for Starbucks’ premium coffee and beverages. But the company’s high-growth days seem to be a thing of the past. With nearly 40,000 stores already in existence, it’s arguable that the company is running out of places to open new stores that won’t at least partially cannibalize its existing stores. Then there’s the rise of more informal competition Dutch Bros struggle with.
It’s not a bad stock to own, that’s for sure. But a further 630% gain over the next 20 years seems highly unlikely.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool has a disclosure policy.
If You Invested $1,000 in Starbucks Stock 20 Years Ago, You’d Have This Amount Today is originally published by The Motley Fool
