November 3, 2014
A 'Forever Stock' Poised For Global Domination
By Dave Forest
The backdrop is Bangkok, Thailand -- where I'm spending a week meeting with colleagues before heading on to Myanmar.
I happened to be strolling down Bangkok's main artery, Sukhumvit Road, on my way to a meeting about 30 minutes from the Intercontinental Hotel, where I usually hang my hat.
What I saw was frankly incredible.
In 30 minutes of walking, I passed no fewer than six different Starbucks (Nasdaq: SBUX) locations. That's about one store every two blocks. Below are some shots of this diverse array.
Not only does Starbucks have a major presence here -- the company has made itself a mainstay of street life, all in a short period of time.
This is just a taste of what's been going on around the world for the company.
Earlier this year, Starbucks hit a major milestone in its global growth, opening its 20,000th store worldwide. Today, the company operates in 64 countries.
And consumers aren't the only ones that have been happy with the company. Just look at the gains shareholders have enjoyed over the past five years...
That's a significant achievement. And it flies in the face of analysts, which questioned whether the giant firm could continue to expand its operations at a brisk clip.
The reasons for Starbucks' success became clear after I visited a number of these stores.
You see, the world's greatest businesses usually follow one main creed... Sell a simple, standardized product with universally high demand in every corner of the world.
This helps Starbucks internationally in a couple of ways.
It allows the company to provide a reliable experience. My grande medium roast on Asoke Road is pretty much the same as the one I get on Burrard Street back home in Vancouver.
But simplicity also means that the product can be tweaked to maximize local appeal. I always find it fascinating when visiting Starbucks abroad to see what custom items they have on order.
In Japan, for example, the hojicha tea latte is extremely popular (and delicious -- it's a shame it hasn't become widespread in North America).
Bangkok's stores also have a distinctly Asian flavor, with items like macha tea cakes and red bean Frappuccino.
Starbucks is thus able to create a perfect balance between global reliability and custom-tailored experience. And this is a big part of the reason the company has taken the world by storm.
Here's another example of what sets this well-managed firm apart from many of its would-be global competitors: Its currency foresight.
You see, many currencies globally have been falling against the dollar lately. That means firms that sell internationally in yuan or Thai baht are today receiving fewer dollars when they change these local profits back into the head-office currency.
In recent issues of my premium newsletter, Top 10 Stocks, I told readers how fluctuating exchange rates have been hammering the financials of a number of high-profile firms lately.
But not Starbucks. The company turned in a record-setting quarter -- despite all of the currency risk it and other companies face when operating globally.
How? The firm plans ahead. By hedging currencies in its major countries of operations and locking in a guaranteed exchange rate, it removes day-to-day shifts from the profit equation.
That's a smart move. At the end of the most recent quarter, Starbucks had over $664 million in foreign currencies hedged. Meaning it can generate profits abroad and not see them evaporate when changed into dollars.
These are all signs of a company that's carefully planned its overseas expansion program. I expect the firm's stellar growth abroad (not to mention in North America) will continue.
Bottom line, there's a good reason Starbucks is a core holding in my Top 10 Stocks portfolio. You see, stocks like Starbucks belong to a special group of securities I call "Forever" stocks. These are world-dominating companies that pay investors a fat dividend, dig a deep moat around their business to fend off competitors and buy back massive amounts of stock, boosting the value for the rest of the shares. Like the others in my upcoming report, "The 10 Stocks To Own For The Rest Of Your Life," Starbucks is a solid enough stock to buy and hold "forever."
The stock saw a notable decline at the beginning of 2014 -- but has more recently consolidated around the $77 mark. If you haven't already added this forever stock to your "buy it and forget about it" list, now is an ideal time to do so.
Special Editor's Note: We're excited to announce that Dave's groundbreaking new research report, "The 10 Stocks To Own For The Rest Of Your Life," will be coming out early next month. This never-before-seen list of 10 "Forever" stocks has seen an average gain of 829% over the past decade, beating the S&P 500 by more than 7-to-1. Dave recently shared his new research and a few of these stocks with a live audience at St. Edward's University, and now he wishes to share them with you. To be the first to get access to the filmed version of this special presentation as soon as it's released, click here now.
Good investing,
Dave Forest
Chief Investment Strategist
Top 10 Stocks
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