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Brand Buys: Starbucks and Whole Foods
02/26/2016 7:00 am EST
When assessing stocks, growth expert Briton Ryle pays particular attention to top brands and strong managements; here, the editor of The Wealth Advisory looks at two favorite plays in food and beverage sectors.
Starbucks is an amazing company. Management has done an excellent job of growing revenue every year over the past decade except for an understandable slip during the throes of the financial crisis in 2009.
The company has averaged over 12% annual growth even including that tough year. It’s one of the best-run companies in the world.
Management has been kind to shareholders in more ways than just running a stellar business, more than doubling the dividend since 2011.
And just as we predicted, they hiked the quarterly payout amount again in November of 2015…by a solid 25%.
In the first quarter of 2016, the firm opened 528 net new stores in the quarter globally, including a record 281 stores in China/Asia Pacific.
A record $1.9 billion was loaded on Starbucks Cards in the US and
Canada; one in six American adults received a Starbucks Card over the holidays.
We added Starbucks to our portfolio in 2012 and we continue to rate Starbucks a buy because its execution is so good.
Whole Foods Market (WFM)
Whole Foods Market practically started the trend of healthy living and remains the model for the rest of the industry.
In addition to growing a great brand and establishing a company that’s become the model for its industry, management here has been growing revenues at a breakneck pace; they’re up over 50% in only the past five years.
And, because of the efforts of a top-notch management team, that pace shows no signs of slowing.
Behind any great company, you’ll find great management making strategic moves to ensure the company is always one step ahead of its competition. And that’s exactly what we’re seeing at WFM.
In the first quarter of 2016 the firm reported record sales of $4.8 billion. It returned $45 million in quarterly dividends to shareholders and repurchased $634 million or 21.2 million shares of common stock.
Whole Foods’ management has created an entirely new segment of stores—called 365—focused on the millennial market.
As the millennial generation continues to amass more and more buying power, that growth will only accelerate for Whole Foods Markets.
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