A Bold Coffee Play

Featuring Chad Morganlander

Chad Morganlander of Washington Crossing Advisors is bullish on Starbucks, one of the most beaten-down names in the Dow. Despite store closures and a departing CFO, Chad sees upward momentum for Starbucks due to growth potential in global markets. He lays out his thesis in this interview with Brian Price. Filmed on July 2, 2018.

Published on
6 July, 2018
Trading, Food agriculture, Global Investment, Consumption
9 minutes
Asset class


  • CM

    C M.

    10 7 2018 02:00

    0       0

    In the Nashville area, SBUX is busy all the time. While independent coffee shops do well here, you can see 10 cars waiting in the drive through lane at Starbucks. I also visit one in a rural town, Manchester, off of I-24. Very busy in the afternoon. In talking with the staff, find out their business is strong throughout the day due to Interstate traffic. Believe this is an opportunity for expansion, particularly in the South, where good coffee places can be few and far between. And while coffee brands can be personal taste, there are alot of coffee drinkers that find Starbucks (or any premium coffee) much better that Folgers or McDonalds. On China, their government stated that they would not penalize US companies investing in their countries. Have a feeling due to their political stance that they will need see a lot of blow back from the Chinese government. Big question is the next recession, as they will certainly see a downturn in their business.

  • SH

    Steve H.

    9 7 2018 16:18

    0       0

    Mr. Morganlander's outlook seems far too JOvial.

  • DS

    David S.

    8 7 2018 03:59

    0       0

    I added to my watch list, to see how SBUX plays its cards with all the problems. With a 59% gross margin, 39% return on invested capital and gaining worldwide exposure it is worth watching. I enjoy their espresso, no sugar, in a ceramic cup - but that is not a reason to buy. DLS

  • VM

    Vincent M.

    8 7 2018 02:16

    3       0

    I buy Black Rifle coffee ... superior product at a lower price. A recession will hit them hard as over priced products are the first to go... buy MCD... on their continued weakness.

  • SS

    Sam S.

    7 7 2018 13:10

    4       0

    I know someone who "was" a manager at SBUX -- what a mess. Their coffee is crap and needs lots of flavorings to kick it up a notch. I can buy mild roast Folgers at Costco $8 for 3 pounds of ground coffee. That's a lot of coffee. Buying coffee at SBUX is like owning a pool----walk buy and throw in your wallet. SBUX opens and closes stores like crazy. Betting on China-----not for coffee. The Chinese will figure a better cheaper way to make good coffee at a the right price. Their pricing, their rewards, store experience, battle for the bathrooms----not worth it. With that mindset, why buy pre-packaged in a store. I'm just saying.

  • NI

    Nate I.

    7 7 2018 03:50

    3       0

    I'm a formerly loyal Starbucks customer, but the price hikes and changes to the rewards program that slapped their long-term customers in the face left a very bad taste in my mouth. I bought a thermos and an expresso machine. No more SBUX and better coffee for less money. Ok, ok, I'm just one person I know... but in the bigger picture, the economic data is flashing red that consumers are broke and credit expansion just can't go much further. Against that backdrop, I think the $4 cup of coffee is history. There will be a time to buy SBUX, but I think it will be when times get better. Of course if the stock gets beaten down enough, then sure I would buy it.

  • DM

    Dan M.

    7 7 2018 00:20

    7       0

    5% target in 3 months with a weak chart using a fundamental stop loss which strongly implies risk >> reward -- this looks like a completely nonsensical trade which no trader should even consider. What am I missing?

  • FH

    Franz-Xaver H.

    6 7 2018 21:29

    3       0

    Talking about longer term prospects for a trade? The chart looks bad and the fundamentals of the company are getting weaker IMO. CFO leaving must mean nothing but has to be factored in.

    I am hearing a company speaker, not a trader.

  • PG

    Pablo G.

    6 7 2018 13:51

    5       0

    Not sure I would try to catch the falling knife. Why not wait for some indication of a bounce?

  • BD

    Bruce D.

    6 7 2018 12:28

    6       0

    Chart says give it time, wait for $40,then buy. Headwinds are large right now......

  • KJ

    Kulbir J.

    6 7 2018 09:40

    12       0

    Starbucks is/will face a lot of competition from Costa Coffee in China. Market saturated in USA. Coffee commodity prices are also expected to increase, which is negative for Starbucks as they won't be able to pass on all the costs to consumers.

    Not a lucrative trade in my opinion.