Greg Weston

Is Starbucks a Bargain? It Almost Goes Without Saying

The Starbucks brand I think has been permanently tarnished in the USA by retails sales at places like 7-11 and Wal-Mart and by the sales of energy drinks in tall aluminum cans. Earnings can always be boosted short-term by cutting prices on a product that has a high margin and strong brand, but this cannot continue to work.

Another risk: At my old employer, which had about 500 white collar workers on site and provided a lot of the business for one SBUX location, decided to install a few espresso machines in the employee lunch room.

Boom! There went tons of sales.

Finally it is folly to invest on the idea that P/E will soon return to "normal" levels. You have no way of knowing this, and if you need you could make a much larger fortune trading SPY LEAPS.

I would be a buyer of SBUX around 5.5, and have an alert to tell me as soon as it does.

Starbucks Stops Paying the Rent

Interesting. I am a real estate lawyer, and Starbucks is quite typical with these hardball tactics.

Commercial real estate is imploding because of news like this. Assumptions about rent and rent growth were too high, as was the degree of leverage in these deals.

If you have a real estate contract dispute, DO NOT assume the other party is going to work things out with you in a fair matter. Especially if the other party is a big corporation like Starbucks or DR Horton. Instead, hire a lawyer immediately. Too many people wait until too long before hiring a lawyer, and in the mean time take actions that hurt their positions.