Twenty years ago Starbucks (NASDAQ:SBUX) was successfully building a chain of coffee shops that everyone knew. The prospect of becoming one of the most prolific food and beverage companies on the planet, however, seemed distant at the time.
We now know that this is exactly what was planned. Its store count increased from 7,800 stores to nearly 39,000 at the end of March, and quarterly revenue increased from about $1 billion to $8 billion.
Investors who recognized its growth potential were of course rewarded for their patience.
Let’s talk about being in the right place at the right time!
Starbucks is well over 20 years old, for the record. Its first store was opened in 1971, and it took several years after that for its growth train to take off in earnest.
In retrospect, the company reached its full potential at the perfect time. From the mid-1980s until 2019, before the pandemic, consumers Across the world – and in the United States in particular – shopping and eating and drinking away from home have become commonplace. Starbucks delivered a premium product that these people wanted where they wanted it. No other organization was willing or able to do the same.
The bottom line for investors? Since mid-2004 alone, Starbucks stock has climbed from a price near $10.80 to its current value of just over $79 per share. A $1,000 investment in the company at that time would be worth about $7,300 today.
Don’t expect Starbucks stock to repeat the feat
Consumers still pay for Starbucks’ premium coffee and beverages. But the company’s days of peak growth appear to be a thing of the past. With nearly 40,000 locations already in place, it’s arguable that the company is running out of space to build new stores that won’t at least partially cannibalize existing ones. Then there’s the rise of more informal competition as Dutch Brothers to fight.
It’s not a bad stock to own, to be clear. But another 630% gain over the next 20 years seems highly unlikely.
Should you invest $1,000 in Starbucks right now?
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James Brumley has no position in any of the stocks mentioned. The Motley Fool posts and recommends Starbucks. The Mad Motley has a disclosure policy.
If You Invested $1,000 in Starbucks Stock 20 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool
