3 Reasons Starbucks Can Keep Growing in the U.S.
Starbucks Corporation (NASDAQ: SBUX) shares had their biggest one-day loss in two years last month after the coffee chain cut its earnings forecast for the second time this year. The stock gave up 9.2% as investors seemed to think that the company's inexorable growth at home may be coming to an end, especially as traffic has lagged over the last four quarters.
Those concerns increased when BMO Capital Markets issued a downbeat comment on Starbucks last week, arguing that the company was approaching a saturation point in the U.S. BMO downgraded Starbucks to market perform after finding that the average Starbucks location has 3.6 other Starbucks cafes within a one-mile radius.
BMO concluded from that statistic that cannibalization may be occurring as new stores take sales from old ones, which compounds the competition from "third-wave" coffee shops. Analyst Andrew Strelzik sees Starbucks growth slowing because of that concentration.
Source: Fool.com
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