Portfolio Update: New Addition (SBUX; April 30, 2015)

starbucks

 

It’s been a good week so far. For starters, the weather is warming up and it’s definitely feeling more like summer than spring out here in the Bay Area. I have a local REI meet up scheduled for later today, so I’m definitely looking forward to relaxing outside with a good drink in hand.

In addition, I came into a $5,000 windfall earlier this week, when a loan repayment was made back to me; I wasn’t expecting to receive these funds until a much later date.

As such, I had one of two options — stash the cash, or invest it back into the market. The market got beat up a little today, so I decided to just go ahead and fill a position I’ve been meaning to for the longest time. This morning, I executed a limit order to purchase 100 shares of Starbucks (SBUX) for $49.99/share.

SBUX is a stock that has been on my radar for the longest time, but unfortunately I wasn’t smart enough to get in earlier this year before the stock started to take off. SBUX recently had a good earnings report, and the stock briefly touched $52.09, before pulling back this week.

Here are some keys stats from Morningstar:

Screen Shot 2015-04-30 at 2.34.33 PM

With a current P/E of 29, forward P/E of 27, and PEG of around 1.5 or so, SBUX is certainly not trading at a discount. If anything, you could argue that I paid a premium to own this stock at this point in time.

And that’s fine with me. In general, I don’t mind paying retail for high quality. As I’ve mentioned in some of the more recent posts, I really don’t want to keep tabs with the market on a regular basis anymore. These days, I’m trying to fill my time with other enjoyable activities outside of investing. But if I happen to stumble upon a large sum of money (like this week), I also won’t hesitate to deploy it either… With where the portfolio sits right now, my preference with this move was to get into a SAFE, let me “sleep easy at night” holding.

Awhile back, I put together my stock investing plan for individual stocks. Although I’ve somewhat deviated from the initial 1.0 blueprint, for the most part, I’m still executing according to plan.

SBUX is a quality holding that I won’t mind holding for a long period of time. It’s a buy-and-hold stock, and even though the dividend yield is low today, I feel like it’s almost inevitable that this stock becomes a dividend powerhouse over time. This stock aligns well with my preferred strategy of investing for future growth along with future dividend growth.

And after so many dates, meet ups, and get-togethers at a Starbucks, frankly I’ve gotten tired of always being just another customer; it’s about time I became a shareholder! 🙂

With best-of-breed stocks, often times it’s tough to purchase them discounted. SBUX is a perfect example of that. Sure, there will most likely be better entry points in the future, but I’m happy enough to lock this holding down for the long haul. 5, 10, 15 years from now, this entry price of $49.99 should look minuscule…

I’ve been going to Starbucks since as far back as high school. After my limit order filled this morning, I joked with a buddy that I just purchased “100 videogames” this morning. Well, that’s something I might have done in high school had you handed me $5,000 and told me to go spend it. 😉

As an adult, it’s just business as usual. This transaction should definitely produce better returns over time than the those old playstation games!

We’ll see…

 

Happy Investing!

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TawcanFI FighterRoadmap2RetireTime In the Market Is What Matters Most: “Overpaying” For Quality InvestmentsDividend Hustler Recent comment authors
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Dividend Hustler
Guest

Awesome purchase FIF. I don’t think you can go wrong with this purchase when you look back in 10 years time. Everyday, next to beer and cigarettes, people are always drinking coffee. It’s not even a want anymore, it’s become a necessity. I’ll be purchasing myself soon enough after June when I hear what Janet Yellen has to say. Hopefully we get a bit of a pullback. I’m gonna bank up some cash in the meantime. Have a nice weekend my friend and take care of yourself.

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[…] I’ve been making a lot of stock purchases as capital becomes available. Just earlier today, I picked up 100 shares of Starbucks (SBUX) at $49.99/share. “Value” investors might grimace at that transaction, because at […]

Roadmap2Retire
Guest

Fantastic company. I would love to own some SBUX….I keep thinking that its expensive and wait for better prices only to find that it keeps climbing. Its been on my radar since it was $73 (pre-split) and theres no sign of slowing down in its growth.

Congrats on adding this great company to your portfolio.

Best wishes
R2R

Tawcan
Guest

Awesome purchase, Starbucks is a pretty solid stock, wish I picked some up years ago though.

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