October 31, 2014
A 'Forever Stock' Poised For Global Domination
By Dave Forest
The backdrop is Bangkok, Thailand -- where I'm spending a week meeting with
colleagues before heading on to Myanmar.
I happened to be strolling down Bangkok's main artery, Sukhumvit Road, on my
way to a meeting about 30 minutes from the Intercontinental Hotel, where I
usually hang my hat.
What I saw was frankly incredible.
In 30 minutes of walking, I passed no fewer than six different Starbucks
(Nasdaq: SBUX) locations. That's about one store every two blocks. Below are
some shots of this diverse array.
Not only does Starbucks have a major presence here -- the company has made
itself a mainstay of street life, all in a short period of time.
This is just a taste of what's been going on around the world for the company.
Earlier this year, Starbucks hit a major milestone in its global growth,
opening its 20,000th store worldwide. Today, the company operates in 64
And consumers aren't the only ones that have been happy with the company. Just
look at the gains shareholders have enjoyed over the past five years...
That's a significant achievement. And it flies in the face of analysts, which
questioned whether the giant firm could continue to expand its operations at a
The reasons for Starbucks' success became clear after I visited a number of
You see, the world's greatest businesses usually follow one main creed...
a simple, standardized product with universally high demand in every corner of
This helps Starbucks internationally in a couple of ways.
It allows the company to provide a reliable experience. My grande medium roast
on Asoke Road is pretty much the same as the one I get on Burrard Street back
home in Vancouver.
But simplicity also means that the product can be tweaked to maximize local
appeal. I always find it fascinating when visiting Starbucks abroad to see
what custom items they have on order.
In Japan, for example, the hojicha tea latte is extremely popular (and
delicious -- it's a shame it hasn't become widespread in North America).
Bangkok's stores also have a distinctly Asian flavor, with items like macha
tea cakes and red bean Frappuccino.
Starbucks is thus able to create a perfect balance between global reliability
and custom-tailored experience. And this is a big part of the reason the
company has taken the world by storm.
Here's another example of what sets this well-managed firm apart from many of
its would-be global competitors: Its currency foresight.
You see, many currencies globally have been falling against the dollar lately.
That means firms that sell internationally in yuan or Thai baht are today
receiving fewer dollars when they change these local profits back into the
In recent issues of my premium newsletter, Top 10 Stocks, I told readers how
fluctuating exchange rates have been hammering the financials of a number of
high-profile firms lately.
But not Starbucks. The company turned in a record-setting quarter -- despite
all of the currency risk it and other companies face when operating globally.
How? The firm plans ahead. By hedging currencies in its major countries of
operations and locking in a guaranteed exchange rate, it removes day-to-day
shifts from the profit equation.
That's a smart move. At the end of the most recent quarter, Starbucks had over
$664 million in foreign currencies hedged. Meaning it can generate profits
abroad and not see them evaporate when changed into dollars.
These are all signs of a company that's carefully planned its overseas
expansion program. I expect the firm's stellar growth abroad (not to mention
in North America) will continue.
Bottom line, there's a good reason Starbucks is a core holding in my Top 10
Stocks portfolio. You see, stocks like Starbucks belong to a special group of
securities I call "Forever" stocks. These are world-dominating companies that
pay investors a fat dividend, dig a deep moat around their business to fend
off competitors and buy back massive amounts of stock, boosting the value for
the rest of the shares. Like the others in my upcoming report, "The 10 Stocks To Own For The Rest Of Your Life," Starbucks is a solid enough stock to buy and hold "forever."
The stock saw a notable decline at the beginning of 2014 -- but has more recently consolidated around the $77 mark. If you haven't already added this
forever stock to your "buy it and forget about it" list, now is an ideal time
to do so.
Special Editor's Note: We're excited to announce that Dave's groundbreaking new
research report, "The 10 Stocks To Own For The Rest Of Your Life," will be coming out early next month.
This never-before-seen list of 10 "Forever" stocks has seen an average gain of
829% over the past decade, beating the S&P 500 by more than 7-to-1. Dave
recently shared his new research and a few of these stocks with a
live audience at St. Edward's University, and now he wishes to share them with
you. To be the first to get access to the filmed version of this special presentation
as soon as it's released, click here now.
Chief Investment Strategist
Top 10 Stocks