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Contributors: Douglas McIntyre Jon C. Ogg

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Wednesday, July 26, 2006

Most Actives Review: Starbucks

Stock Tickers: SBUX, PNRA, PEET, CBOU

Starbucks (SBUX) is down a sharp 4.2% at $33.90 this morning, on what is not really any company news. Panera (PNRA) fell 9% after their earnings, and that may be the culprit today. The company is set to release earnings on August 2, so we will likely not get much out of the company right before the report. Comparing PNRA and SBUX may not seem fair on the surface, but they are more alike than you think. Both are hip hang-out places that encourage lounging with W-Fi access, both try to appeal to your taste buds throughout the day, and Starbucks is going into more and more of a coffee andc tea PLUS food role rather than just a coffee, tea, and scones spot. Both have had high growth models and both have had high multiples. PNRA now trades at roughly a 30 P/E since its stock has lost 1/3 of the value since its 52-week highs; SBUX has a 49 P/E but is only about 15% off its 52-week highs. There have not really been any analysts out defending (or tying SBUX to PNRA) but you can probably expect that to occur.

Peet's Coffee & Tea (PEET) is also down 3.7% at $28.61 and Caribou Coffee (CBOU) is actually up almost 1% at $6.14.

Jon C. Ogg
July 26, 2006

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