How China Is Lifting Starbucks Stock to New Highs
As a country, China has never been big on coffee drinking... that is, until Starbucks settled there. Starbucks stock has climbed more than 13% year to date, helped by expansion in emerging markets such as China and India. With about 18,000 stores worldwide, it's hard to believe that Starbucks is capable of more retail growth . However, thanks to Starbucks' rapid international expansion, chiefly in China, Starbucks stock should continue to reward investors for years to come.
Global opportunities abound
Starbucks opened its first store in China in 1998, after securing a licensing deal with Mei Da Coffee company. Today, the coffee giant operates nearly 18,000 retail stores in 60 countries. Nevertheless, Starbucks plans to have 1,500 locations in China by 2015, and 4,000 stores in the broader China and Asia-Pacific region by the end of 2013. At this rate, Starbucks' international business is on track to outpace that of Starbucks' U.S. division by 2022.
Aside from the obvious scale advantages this creates, Starbucks stock should also benefit from the ongoing success of the company's loyalty program in China. In fact, it has already sold more than 2 million My Starbucks Reward cards in China -- representing the highest member average per store across Starbucks' global retail network.
Moreover, Starbucks opened 516 new stores in China last year, which helped boost net revenues by 22% for the company's China and Asia-Pacific segment during its second quarter. Not to mention, Starbucks' same-store sales in the Asian region jumped 8% for the period. This bodes well for Starbucks' future in China and the greater Asia-Pacific region going forward.
Bottom line
We're still in the early stages of Starbucks' international growth story. Opportunities in the Asia-Pacific segment should play out well for Starbucks stock in the years to come, as the company is set to add as many as 4,000 stores in that market alone. While China is certainly not the whole story for Starbucks, winning over the Chinese market is critical to the stock's future success.
However, investors don't have to go to China to profit from our increasingly global economy. In fact, Starbucks isn't the only American stock that's aggressively pushing into new markets overseas.
The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how to capitalize on three other stocks that are making big moves abroad. Click here to get your free copy before it's gone.
Editor's note: A previous version of this article misstated the number of total Starbucks locations and the number of locations planned in China. The Fool regrets the error.
The article How China Is Lifting Starbucks Stock to New Highs originally appeared on Fool.com.
Fool contributor Tamara Rutter owns shares of Starbucks. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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