Starbucks is an exemplar

The java joint defies conventional wisdom every day.

By Jim Cramer Nov 7, 2011 10:05AM

the street"We are beginning to think our downgrade to neutral this past summer may have been premature."

 

That's a quote from a Goldman Sachs (GS) report on Starbucks (SBUX) after the java joint reported an amazing quarter, including a 10% bump in same-store sales and tremendous international expansion.

 

But it might have been applicable to so many companies this quarter, so many that have reported and not skipped a beat or been much better than expected or shown incredible resilience in the face of all of the things that the media talk about, many of which are actually worth talking about.


Post continues below.

I think Starbucks is emblematic because it is one of those stories that should have run out of gas by now. It has competitors everywhere -- I follow five competitors that are out there slogging it out against SBUX every day -- and it sells very expensive merchandise, especially in a worldwide slowdown.

 

Starbucks, frankly, defies conventional wisdom every day and has been opening stores around the world at a pace that would normally lead to tremendous screw-ups. But the execution seems to be getting better and better.

 

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It's just very difficult to believe. And that's the issue with so much of the research that came out during the summer dive. You see research like the Starbucks downgrade was more global, more macro than micro, an extrapolation of what had to happen -- namely, the collapse of Greece, the crush of Italy, the lack of new jobs anywhere, the government near shutdown -- versus what did happen.

 

You needed a full-scale apocalypse to happen for some of these companies to be defeated, and it didn't.

 

So we find ourselves smack in the middle of some excellent reports coupled with analysts who are stunned that the companies can do so well, which is how stocks like Starbucks can continue to climb, even as it is already up more than 40% in the past year.

 

Defying analysts' expectations. It's never been this easy, thanks the horrendous macro environment and the insistence by fabulous executives like Howard Schultz to give in to the headwinds that are supposed to stop them in their tracks.

 

Yep, the downgrade was premature. And with the momentum that Starbucks has going into next year -- particularly the momentum in China, where the company is building a new cafe every four days -- I think an upgrade, not a downgrade, would be more fitting for this fabulous growth company.

 

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.

 

jim cramer
Jim Cramer
is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for his charitable trust.

5Comments
Nov 7, 2011 11:30AM
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just think what corruption there is when an utter fool like cramer even has a job
Nov 7, 2011 1:09PM
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Jimmy, I graduated from  the 8th grade in Pinal county AZ , and the sad fact is, I could have wrote that . I want something with some meat on it bones, so to speak. Sbux , coffee , your just doing the obvious , Remember Jimmy your one of the greatest pickers that ever strolled down wall street, your just hyding in some f-ing Comfort Inn,  are you scared  ...,  O Jimmy, are you friend with that so called DR Najarian

he over rates himself , he must have graduated 8 grade also  ,hasta nunca

Nov 7, 2011 1:21PM
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it's time for msn and cnbc   to FLUSH.....i watch anything but their egotistical staff led by

the pump and dump self aggrandizing shyster cramer

Nov 7, 2011 1:12PM
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cnbc hosting republican debate fits their idea of a financial cable channel that only wants to help investors make money. kiernan,sorkin,cabrerra and kudlow should have a great day making sucking sounds in questioning their true idols. Sell cnbc (can not buy credibility) Buy Bloomberg. Buy American and support our Troops.
Nov 8, 2011 4:56AM
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Man these comments all full of stock shorters if the markets coming to a end why are you wasting your time (and mine ) here on this story ? Yeah I wish I got into Starbucks at the bottem and I'm not sure how much coffee Chinamen drink but a new cafe every 4 day must cost something anyway We pickers thrive on this how else can you buy low and sell high without the market moving? For instance  how about Spanish Broadcasting Systems.jumped 30+ cents yesterday looks like it's going to be a good quarter  SBSA with a P/E of 2.06 Beta of 1.21 and earnings per share of $0.72...whats not to like?  A Hispanic media and entertainment company which owns and operates 21 radio stations in New York, Los Angeles, Miami, Chicago, San Francisco and Puerto Rico.  SBSA is based in Coconut Grove Florida and also owns 2 T.V. stations reaching 5.6 million people.  This stock is currently selling for around 1.45 a share.  Earnings of 72 cents a share!  Thats what gets me.  Better than lots of stocks I've looked at.  An undescovered gem if ever I saw one.  By the way they have been around since 1983 and the 52 week high was $12.00.  Check it out for yourself!
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