I made a purchase for my Portfolio back on the 1st of the month that I’ve yet to share. So, here I am to get that done. It was an early start to the month of May with regard to transactions, to be certain.
On the heels of a poor earnings report that included a full-year guidance slash, this stock dropped in price rather significantly. So, I swooped in and added to my position.
While the short-term outlook for this company doesn’t look too rosy, the company should return (according to analysts) to double-digit earnings growth by next year. I hope to benefit from the expected turnaround.
This stock is already in the top half of my Portfolio ranks, and this addition solidifies that position.
Here are the details for my purchase…
Starbucks (SBUX)
I added to my SBUX position back in January (at $91.47), thinking I was getting a decent value, but that has proved to be wrong.
This is my 1st addition since then, and my 4th addition to SBUX since I initiated my position back in 2016. The P/E ratio for this latest purchase (~20.5) is the lowest I’ve gotten for any of my previous adds.
At the end of April, I was a bit underweight in my Consumer Discretionary sector, so this purchase will help my sector weighting in that regard.
About 1 year ago at this time, the stock was trading above $114, so the recent tumble has been very noticeable.
On 5/1/24, I bought 5 shares of SBUX at $73.20 for a total of $366.00. The stock was yielding 3.11% at that price. This yield is above my current Portfolio yield of 2.70%.
My SBUX position grew by ~3.54% with this addition, bringing my share total to 146.308 shares. The purchase raised my cost basis by only $0.34/share, to $63.67/share.
With this buy, my Portfolio’s annual forward dividend income increased by $11.40. My quarterly SBUX dividend will now top $83.39, starting this month.
My buy didn’t help SBUX move up at all in my Portfolio rankings, as the price decline from the bad earnings news more than offset my investment. Currently, SBUX is my 25th largest holding. It’s not far behind Texas Instruments (TXN), but has a sizable lead on Omnicom Group (OMC).
With SBUX being an existing holding, the number of stocks in my Portfolio remained at 58.
Summary
I didn’t even wait one day into May to make a Portfolio move. It’s not that I was eager, but the significant drop by SBUX in response to earnings and guidance seemed a bit overdone. Adding a few shares with the hope of benefiting in the long-term was the plan.
SBUX has been on my watchlist a few times over the past few months. This most recent drop had it fall easily through the price target I had set up.
My buy of 5 shares resulted in an investment of $366 into my Portfolio, and increased my forward dividend income by $11.40.
My SBUX position grew by a little more than 3.5%. My cost basis also rose ever so slightly with the purchase.
Even though SBUX already has a place in the top half of my Portfolio, I’ll continue to look for further opportunities to add. Right now, I’ll target a price in the upper $60s.
Did you add some SBUX on their earnings/guidance-related decline? Or do you suspect further troubles for the company and want to see the business start to turn around before committing capital? Please share in the comments!