Should Starbucks Shareholders Be Worried?

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The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith discusses topics across the investing world. Starbucks has been a market darling over the past few years. The coffee slinger has been a multibagger for some, and a still-solid investment for others. But with all that growth, Starbucks has also filled out its multiples, and now sits at a not-so-cheap P/E of 30. In an effort to continue the momentum, it seems that Starbucks is diversifying away from its core-competence -- selling absurdly high-margin coffee. Investors shouldn't be worried though. The company's investments in energy drinks, smoothies, and baked goods may result in lower margins, but they aren't a waste of money. They're among a multitude of long-term bets Starbucks is making to keep the company growing.

Getting in on Starbucks early would have been a great move, but if you're like me, you missed it. Don't worry, though, because there is always another big winner lurking around the corner. We've named a few in our report "The Stocks Only the Smartest Investors Are Buying." We invite you to download a free copy. To find out the name of the bank Buffett would probably be interested in if he could still invest in small banks, just click here.

At the time this article was published Austin Smithhas no positions in the stocks mentioned above. The Motley Fool owns shares of Panera Bread and Starbucks.Motley Fool newsletter services recommendMonster Beverage, Panera Bread, and Starbucks. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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