Starbucks Inc. (NASDAQ: SBUX) has locations all over the world, but the Seattle-based coffee company is making a big push into China.
That’s a big deal, especially since Starbucks stock is already one of the best stocks to buy right now.
Hedge fund titan Bill Ackman just made a nearly $1 billion investment into Starbucks in early October. His hedge fund, Pershing Square Capital, says it was the “rare opportunity to own one of the world’s best businesses at a discount.”
Money Morning Chief Investment Strategist Keith Fitz-Gerald beat him to the punch, too. Back in August, Keith said Starbucks wasn’t just a “nice to have” stock, it was a “must have” stock.
Starbucks is simply one of the best companies you can own right now.
But if you have any doubts about its growth potential, wait until you see its plans in China. It all starts with the number 780 million…
Why Investing in China Is an Unparalleled Opportunity
There are already 430 million people in China’s middle class, over 100 million people more than the entire population of the United States. But it’s getting even bigger.
China’s middle class will be 780 million strong by the mid-2020s, nearly doubling in size.
That’s why China is already home to the world’s largest mall, the New Century Global Center. It just happens to be the world’s largest building, too.
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And there might not be a bigger catalyst on the planet for companies that sell goods and services.
You see, the middle class is the largest income group – and it has the disposable income to spend money on luxuries, including that $4 latte on the way home from work. That’s part of what’s helped Starbucks explode in popularity in the United States, where it now has nearly 14,000 retail locations.
But Starbucks isn’t just popular – it’s enormously profitable. The company has booked a profit for 12 years in a row, and it’s grown its profits every year for five years straight. Now Starbucks is more profitable than ever. Its net income has nearly doubled over the last year, rising to a level of $4.5 billion.
Starbucks has just 3,000 stores in China now. That’s changing in a hurry. Starbucks plans to open a new store in China every 15 hours for the next four years, nearly doubling the number of stores by 2022. That’s simply an incredible rate of growth. And it makes total sense, considering the massive profit potential behind China’s exploding middle class.
Starbucks’ plan could triple its revenue in China in just five years.
It gets even better.
Starbucks has almost no competition in China, and it could be years before any of the other big brands follow it there. Starbucks has used that to its advantage by experimenting with new ideas, like delivery services.
After expanding delivery to 1,100 stores in China, the company found it wildly successful. Customers were able to order and pay on an app and were delivered drinks at the same temperature they were when first prepared.
Starbucks’ CEO Kevin Johnson said the company’s innovations in China are happening “faster than any other part of the world.”
That’s exciting, but there’s another innovation we’re more interested in.
Keith says Starbucks is diving headfirst into the Big Data trend, and that’s helping boost its performance. Starbucks rolled out its “Digital Flywheel” to help it leverage its inventory and commercial data into even more profits.
This will allow Starbucks to target individual customers with personalized offers, manage its inventory with predictive algorithms, and boost revenue across the board.
Now you know why Starbucks is one of the best companies on the planet, but its stock is also a perfect buying opportunity.
It’s trading at 21 times earnings, which is below the S&P 500’s P/E ratio of 22.6, so you know you’re getting a good deal on the stock.
Plus, with a Money Morning Stock VQScore of 3, the stock has serious upside.
It’s simply one of the best stocks you can buy right now, period.
And if you want to find even more research and opportunities like this, we’ve got you covered.
You can find Keith’s very best opportunities, targeting smaller companies and bigger, faster gains, in his premium research service, Money Map Report. Learn more here.
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