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Starbucks: A 13% Yield And 20% Share Price Discount

Summary

Starbucks is a great company, with excellent long-term prospects.

But its stock price has been struggling to gain traction after a big rally in 2015.

To take advantage, some investors should consider selling put options which will generate a solid return on cash, and if exercised gets investors in SBUX at a major discount.

Shares of Starbucks (NASDAQ:SBUX) have struggled since reporting earnings in April. Despite executing at an extremely high level, its impressive growth is no longer a secret. Investors and analysts have long since figured out that Starbucks' mobile initiatives are working, growth is accelerating and the company has found its groove.

It's why the stock trades with a P/E north of 30, why earnings results are roughly in line at best and ultimately, why shares trade lower despite great results.

But you know what? That's okay for me. In fact, as much as it hurts in the short term, I actually prefer it. I consider Starbucks to be a Future Blue Chip stock, meaning I believe it has superior growth for a number of years, but will ultimately be a lower valuation, shareholder-friendly company in the later years.

To cement the best possible cost-basis in my portfolio, I need pullbacks in order to generate buying opportunities, (aside from the pullback/consolidation this year, I haven't had a chance to add since 2014). Starbucks isn't a company I focus on quarter-by-quarter. I'm looking at it for the long term, and while there may be better stocks out there, I can't think of...


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