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Who says you can only make money in tech stocks?
Not The Juice. Three of the tickers we constantly waxed bullish on throughout part of 2022 and all of 2023 continue to light up the stock market scoreboard. And, technically, they’re not tech. At least not how we think of Nvidia (NVDA) or Apple (AAPL) as being tech.
That said, we love these three names so much because, in many ways, they act like tech companies. Whether it’s leading the way in mobile and digital or creating incredible consumer ecosystems, Starbucks (SBUX), DoorDash (DASH) and Uber (UBER) are all stocks we continue to feel more than comfortable suggesting as long-term investments.
Let’s do a quick review, then check in on the latest from Starbucks. On Monday, we double dip with DoorDash and Uber.
We first sung Starbucks’ praises in April 2022:
Active Starbucks’ Rewards members were up 21% between 2020 and 2021 to 26.4 million. The company added 1.6 million new active members in Q1/2022 alone, with 53% of all rewards members driving sales in the U.S.
In China, where the company now has more than 5,500 stores, rewards members total 18 million. But here’s the kicker – that’s a 2.6 million annual increase (impressive even without a pandemic). And those loyal Chinese customers account for 75% of sales in the country.
Since that report, active rewards members have increased to 75 million worldwide. So, they’ve nearly tripled! They grew by more than 25% in this most recent Q3 alone. Rewards members in the U.S. now make up 57% of domestic sales.
In China, active rewards members hit more than 20 million in Q3. That’s more than the total number enrolled in the program just a year and a half ago. Starbucks defines active as members who have made a purchase in the last 90 days.
Starbucks continues to expand its cold drink business. They now comprise 75% of U.S. sales. In Q3, customers customized roughly 60% of Starbucks’ beverages. This is something The Juice wrote about it in August 2022 when we were ahead of the pack on Starbucks’ cold drinks and customization:
The key to these drinks: You can customize them. And they’re Instagramable.
Herein lies the key to Starbucks’ sway with Generation Z. They Instagram and TikTok the shit out of Starbucks’ colorful beverages.
Not too shabby.
However, if you used a strategy The Juice loves and advocates called dollar cost averaging. We explained how it works in relation to another one of our favorites, Airbnb (ABNB):
No doubt, Airbnb stock took some hits shortly after we suggested it in May of last year. However, when we suggest stocks, nine times out ten, we’re talking to long-term investors. And we make that clear. We suggest stocks that we believe have strong, long-term narratives.
If you bought ABNB on dips and weakness throughout the second half of 2022 and the first few months of 2023, you’re sitting pretty today. Because we’re geeks, we ran some numbers.
If you bought $500 worth of ABNB on the 15th (or closest weekday) of the month, every month, starting in May of 2022, you’d have roughly 67 shares today, worth $9,391 (as of Friday’s close), good for a 25.2% return, so far, on what amounts to a $7,500 investment.
Not as good as if you went with our Uber (UBER) and DoorDash (DASH) picks, but still pretty damn good.
The Airbnb example also shows the power of dollar cost averaging, that is buying a stock at regular intervals over time. This strategy means you buy fewer shares when the stock price is high and more shares when it’s low. This is why we often suggest buying over time and on weakness with these – sometimes – relatively volatile names.
For the record, despite all the cities and people hating on Airbnb, the stock is up nearly 39% YTD and about 22.8% over the last year.
Yes, the dollar cost averaging strategy is perfect for long-term investors. If you used it, you would have quite possibly been buying shares on the unwarranted downside SBUX experienced mid-2022 and various opportunistic dips in 2023. Your patience and persistent buying is paying off. SBUX is up about 12.5% over the last month.
No shocker. Because, Placer.ai data shows Starbucks’ foot traffic is crushing it, thanks in part to the company’s seasonal drinks. Particularly the famed pumpkin spice latte.
Monthly visits to Starbucks in September of this year are up 7.8% compared to last year. At competitor Dunkin’, who sort of feebly jumps on the seasonal drink bandwagon, visits are down 2.5% year over year.
The Bottom Line: Starbucks began building out its digital and mobile app ecosystem 15 years ago. Long before its competitors. They were so far ahead of the game it’s not even funny.
The Juice knew some of the people involved at the time. For example, the architect of the Starbucks’ Rewards program — a guy named Adam Brotman — started with the company in 2009. So we’re not just scratching ourselves here at The Juice. We do our homework. And we follow stories — narratives — over time.
If Starbucks is well-established (though we argue it’s also still got a long way to go/grow), then DoorDash and Uber are in their infancy. Our due date for DASH and UBER homework assignment is Monday. So, check your email for the latest on two of the market’s hottest stocks in 2023.
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