I like to find and buy the world’s best companies, ideally when they’ve been kicked to the curb and otherwise left behind; this is often a deceptively simple and secure path to profits, says Keith Fitz-Gerald, growth stock expert and editor of Five with Fitz.

I think Starbucks Corporation (SBUX) could be one of the great sleepers this year for a few reasons. First, omicron or not, people around the world have had it with being cooped up.

Many want to go out and they want a little luxury when they do. Paying $6 to $8 for flavored water goes a long way towards making that a reality.

Second, Starbucks excels at growth. Not surprisingly, that’s where management intends to take things in 2022. Margins will suffer given supply chain problems or so goes conventional wisdom but that’s a ruse best left to other investors who can’t see past the limits of their own thinking.

Some 70%-75% of growth will come from newly opened international locations where margin pressures are less severe. Further, Starbucks margins on ready-made-products including those sold to Keurig fans and via Costco may be 50% or higher. Growing those business segments will further boost profits.

Starbucks has raised dividends for 11 consecutive years which means that the company is arguably a “blue-chip” in disguise. Not the growth player most people think it is.

Third, Starbucks knows how to attract and keep customers better than almost any other company on the planet. Most Starbucks buyers are repeat customers. Management has prioritized customer reward and loyalty programs and that’s reflected by 24.8 million card-carrying, coffee guzzling, pastry munching folks who account for more than 50% of all money spent in Starbucks stores.

At the same time, management estimated last month that holiday spending could result in another $3 billion added to gift cards but I think the real figure could be $4-$5 billion by Q1 2022 which is significant considering that 10% may never get spent!

Banks wish they had it this good. Customers deposit in cash but withdraw in coffee. My target is $140 within the next 12-24 months.

Action to Take: Buy under $110 and on additional weakness. Anything under $100 is a steal like it was last February but the markets may not present that opportunity again. (Disclosure: Keith Fitz-Gerald owns and trades shares of both Starbucks as do members of his family.)

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