After two months on lockdown, we're approaching a return to "normal"...
All 50 states have begun easing lockdown restrictions. In many states, restaurants and retail shops are starting to reopen.
And recent positive data on a potential vaccine and treatment will only make people more confident that they can try and resume some semblance of normalcy in their lives.
This will go a long way toward boosting the broader economic recovery, as well as providing a tailwind for individual businesses.
And as people begin leaving their homes again, a lot of pent-up demand for today's company will come with them...
Starbucks (Nasdaq: SBUX) is a $92 billion coffee giant. The company's brand is known all around the world. It has more than 32,000 stores across the globe. And folks can't get enough of its products.
That's what makes Starbucks a "Global Elite" business. (Remember, the Global Elite have dominant, widely recognized brands, giving them a huge advantage over competing companies.)
Because of the pandemic, Starbucks had to temporarily shut a large number of its stores. Those that remained open were restricted to drive-thru service and delivery orders.
But now, as things are reopening, its business is beginning to recover.
It's easy to see why there's so much pent-up demand for Starbucks products as the stores reopen. Most of its products are loaded with caffeine.
In addition to its positive side effects like increased alertness and higher energy levels, caffeine is also addictive. So it keeps people coming back again and again to get their Starbucks fix.
Nearly all of Starbucks' stores in China have reopened, with CEO Kevin Johnson saying the company has seen a "steady" improvement in the country. The stores have regained more than 80% of comparable sales.
Starbucks is in the middle of a huge push into the Chinese market, as it represents a large, relatively untapped market for the company. And the pandemic isn't going to slow that push. In 2008, Starbucks only had about 250 locations in China. Today, it has more than 4,300. And more are coming...
CEO Kevin Johnson said the company still expects to open 500 new locations in China this year. That's a new store every 18 hours.
Stateside, 85% of company-owned Starbucks stores are open under modified hours and operations. It expects to have 90% of its stores open by early June. And since Starbucks began reopening these stores in May, their recovery has outperformed what the company expected.
Starbucks has also begun opening drive-thrus in the U.K. With the U.K. reopening, the company will have three of its four largest markets (including the U.S. and China) in the process of returning to normal. That will be another boost for the company.
Most stores in Starbucks' third-largest market – Japan – remain closed. But that country is beginning to ease restrictions as well, so we could see a recovery begin to take shape there.
Just look at the update on how its already-open stores are performing...
In the U.S., stores have regained about 60% to 65% of the prior year's comparable sales.
And Starbucks is enhancing its digital ordering options to avoid lines and keep customers safe. The company had already begun expanding its digital business in New York City prior to COVID-19, but the process has been accelerated because of the pandemic.
As the economy continues to reopen, Starbucks stores will continue to see demand recover.
Like many stocks, Starbucks sold off because of the pandemic, falling 40% from its January high to its March low. But the stock has recovered 39% as economies (and its stores) begin reopening from lockdowns. That outpaces the S&P 500's 31% rebound.
On a longer time horizon, Starbucks' outperformance is even more clear. Since 2018, shares of SBUX have soared 35%, dwarfing the 10% return for the S&P 500.
As reopenings continue, people will flood into Starbucks stores. It has a globally known brand and sells an addictive product that keeps people coming back for more. This should be a boost for Starbucks' business as the economic recovery continues.
The Stansberry's Investment Advisory team recommended Starbucks shares to their subscribers in October 2018. Readers who followed their advice are up 44% including dividends, versus a 6% gain for the S&P 500. If you'd like to learn more about a subscription to Stansberry's Investment Advisory, click here.