We recently published a list of Top Dividend Stocks to Buy in 2024 According to Billionaire Paul Tudor Jones. Since Starbucks Corp (NASDAQ:SBUX) ranks 9th in the list, it deserves a deeper look.
Billionaire Paul Tudor Jones recently made headlines after he participated in the Robin Hood foundation’s fundraising event dressed as Neo from the movie “The Matrix.” The event raised $68.5 million. The billionaire, who founded Tudor Investment Corporation in 1980, couldn’t help himself but talk about investing during the event, and highlighted the importance of “Warren Buffett-style compounding.”
“Somewhere, somehow the multiplicative power of compound put you in this seat,” Tudor Jones said.
Paul Tudor Jones’ Recession Prediction
During an interview last year, the billionaire had predicted that a recession was expected to start in the first quarter of 2024. He said at the time that the US was in its “weakest position” since World War II. However, the market rally fueled by AI proved the prediction wrong. Earlier this year, Jones said in another interview that the financial markets represent people’s ideas and what they make of the economic situation. Paul Tudor Jones said that there’s a chance the stock market would be “here or lower” in the next five to ten years. However, the billionaire also said it’s possible that the markets would go higher from here if the next President of the US devises a better “policy response” next year.
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He’s been vocal about AI lately and sharing his thoughts about the impact of technology on our society. He thinks AI could be the “knight on the horse that rides and saves us.”
But AI-related threats worry Paul Tudor Jones. In an interview in January he referred to a survey where close to 3,000 AI experts were asked whether they believe AI would end humanity. According to Jones, a whopping 58% of the experts said yes. The billionaire said US policymakers will have to decide how to tackle this problem. Jones believes AI is growing at an “unbridled pace” since there’s so much money to be made in the domain but the biggest problem for policymakers would be to balance the benefits and threats of AI to make it sustainable.
For this article we scanned billionaire Paul Tudor Jones’ Q1 portfolio and chose his top dividend stock picks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Starbucks Corp (NASDAQ:SBUX)
Billionaire Paul Tudor Jones Q1’2024 Stake: $37,574,816
Billionaire Paul Tudor Jones increased his stake in Starbucks Corp (NASDAQ:SBUX) by 193% in the first quarter of 2024, ending the period with a $37.6 million stake in the coffee chain, which has seen its share price tank by about 20% over the past one year. Starbucks Corp (NASDAQ:SBUX) shares fell recently after Starbucks Corp (NASDAQ:SBUX) posted weak fiscal Q2 results and guidance, as customers in China and across the globe cut back on spending. However, many analysts believe the stock is presenting an opportunity for long-term investors. Based on Wall Street’s 2025 EPS estimate ($8.67) for Starbucks Corp (NASDAQ:SBUX), the stock is trading at a forward P/E multiple of 19, which is not much higher than the industry median of 14.97. Given Starbucks Corp’s (NASDAQ:SBUX) brand value and moat, the company stands out amongst competitors. The stock’s current P/E of 22 is also much lower than Starbucks Corp’s (NASDAQ:SBUX) five-year average P/E of 30. SBUX is one of the top dividend stocks to buy in 2024
As of the end of the first quarter of 2024, 69 hedge funds reported owning stakes in Starbucks Corp (NASDAQ:SBUX), up from 59 funds in the same quarter last year.
Vulcan Value Partners stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its first quarter 2024 investor letter:
“We are pleased to have purchased Starbucks Corporation (NASDAQ:SBUX) in the first quarter. We have owned the company in the past, and it was a good investment for us. The company has strong brand recognition, global distribution, and outstanding retail real estate. The company generates robust free cash flow and has high returns on invested capital as well as a strong balance sheet. Starbucks has used its financial resources to strengthen its brand and enhance customer loyalty. Additionally, the company has continued to see attractive returns from opening new stores. Stock price volatility over the last year is likely due to management changes, disappointing short-term results, and general hesitancy about consumer spending. We believe that Starbucks’ competitive position remains intact, and its value will continue to compound over our five-year plus time horizon.”
Overall, Starbucks Corp (NASDAQ:SBUX) ranks 9th in Insider Monkey’s list of Top Dividend Stocks to Buy in 2024 According to Billionaire Paul Tudor Jones. You can visit Top Dividend Stocks to Buy in 2024 According to Billionaire Paul Tudor Jones to see other stock picks of Billionaire Paul Tudor Jones. While we acknowledge the potential of Starbucks Corp (NASDAQ:SBUX), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Starbucks Corp (NASDAQ:SBUX) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.