I saw an opportunity in a long term Starbucks(SBUX) position this morning. Yesterday, an article in China Daily Newspaper stated that coffee drinking is a growing part of Chinese culture. In Japan, coffee exploded in popularity, over tea, going from an average of 3 cups consumed by the average person to 300 cups, well above the 240 world average. The same thing seems to be happening in China, and the trend has just begun! Starbucks is the #1 coffee company with 100 stores, which they hope to increase to 1000 within 8 years.
The consistent performance of Starbucks stock during the recession is an indication of the company's fundamental strength. The stock is down on performance in the last few months, and the stock lost about 1% in early trading hours this morning. I bought 79 shares with a limit price of $47.86 which I partially funded with a sale of 35 shares of Emerson(EMR) stock at 49.28 for a $161 gain. The purchase of (SBUX) was the only driving influence behind my sale of (EMR). With the dividend (EMR) was paying, it was a tough decision to let it go. I was driven to make the sale/purchase today because of the drop in (SBUX) price due to some news which was likely a short term driver.
It is now close to the end of the trading day. I have positive emotion while reflecting on the trade. (EMR) rose 1%ish after I sold it, but it is currently below the day’s opening price. (SBUX) dropped around 9/10 of a percent from where I bought it, but considering my underlining purpose of buying the stock was my multiple year vision, I am not bent out of shape. http://usa.chinadaily.com.cn/life/2012-10/18/content_15828480.htm
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