"Buy and Hold" Doesn't Work If You Completely Ignore Valuation

The current bear market resulted in the first negative ten-year period for the U.S. stock market in a long time. This has prompted many people to declare that the investment strategy of buying and holding stocks for the long term ("buy and "hold" for short) is all of the sudden "dead" or no longer viable.

Personally, I find this death pronouncement a bit odd. Just because stocks went nowhere from 1999-2008 means that investing in stocks for ten years is flawed generally? Since when does one instance of something not working render the entire concept flawed? I don't think a 100 percent success rate is required for one to declare it a viable strategy.

The reason "buy and hold" became popular is because, over long periods of time, stock prices mimic corporate earnings, which have risen over business cycles since the beginning of our economy. Legendary fund manager Peter Lynch continually reminds people that it is no coincidence that over decades the gains in the U.S. stock market are practically identical to the gains in corporate earnings (stock ownership represents a proportional share in profits generated by the firm).

The key point here is that the relationship only holds over long periods of time. In any given year, there is virtually no correlation between earnings growth rates and equity market gains. That is why "buy and hold" is a widely accepted investment strategy. If you invest over the long term, the odds are extremely high that earnings and stock prices will rise, and do so at higher rates than other investment alternatives.

I bring this up today because a former CEO of Coca Cola was a guest host on CNBC this morning. He and the CNBC gang discussed the fact that shares of Coke are actually down over the last ten years (since this person left the CEO post), as the chart below shows.

The CNBC commentators were quick to point out that Coke's earnings have more than doubled over the past decade, but the stock has actually lost value. Does this example support the idea that "buy and hold" is a flawed strategy, or is there something else at work here?

The latter. Coke stock carried a P/E ratio above 50 back in the late 1990's, during the blue chip bull market. Even when earnings grow dramatically, if P/E ratios are in nose bleed territory, "buy and hold" may not work, as was the case with Coke.

As a result, "buy and hold" does not work blindly. If you dramatically overpay for a stock, there is a good chance that you won't make any money, even over an entire decade. From my perspective, this does not mean that "buy and hold" is dead (the long term relationship between earnings and stock prices is unchanged), it simply means that valuation is important in determining future stock price returns (statistics show it is the most important, in fact).

The takeaway from this discussion is that "buy and hold" investors are likely to do very well over the long term, as long as they don't grossly overpay for an asset. The U.S. stock market in the late 1990's was more expensive, on a valuation basis, than at any other time in its history. Buyers during that time can't be saved from their own poor decision of paying too much for a stock, even by a proven long term investment strategy. Unfortunately, most non-professional individual investors don't focus on valuation when picking stocks for their portfolios, and often pay the price as a result.

Full Disclosure: No position in Coca Cola at the time of writing, but positions may change at any time

Amazon Shares Look Expensive, Long Term Future Returns Appear Limited

In November of 2004 I wrote a piece entitled "Sleepless in Seattle" which postulated that shares of Starbucks (SBUX) were trading at such a high valuation (forward P/E of 48) that even if the company grew handsomely over the following few years, the stock's performance was likely to be unimpressive. I projected an aggressive three-year average annual earnings growth rate of 20% and a P/E of 40 by 2007. I warned investors that even if those aggressive assumptions were attained, Starbucks stock would only gain 6% per year over that three year period.

The analysis proved quite accurate. Starbucks continued to grow its profits nicely, but the stock's valuation came back down to earth. After three years had passed, Starbucks stock was actually trading 12% lower than it was when I wrote the original piece.

Today, shares of online retailer Amazon.com (AMZN) remind me of Starbucks back in 2004. Despite a cratering stock market and weak retail market, Amazon stock has been quite resilient. After a strong fourth quarter earnings report (released yesterday after the close of trading), the stock is up $7 today to $57 per share. Profits at Amazon for 2008 came in at $1.49 per share, which gives the stock a P/E of 38, which is very high, even for a strong franchise like Amazon.

I decided to do the same exercise with Amazon. I wanted to make assumptions that were both reasonable but also fairly aggressive. I decided that an average earnings growth rate of 15% over the next five years fits that mold. Projecting the P/E in January of 2014 is not easy, but given that Amazon's growth rate should slow as the company gets larger, I think a 20 P/E ratio is reasonable given where other retailers trade (less than 15x). By 2014, Amazon's growth rate should be more in-line with other retailers similar in size, so I chose 20 to be higher than average, but not in nosebleed territory like the current 38 P/E.

After some simple number crunching, we can determine that Amazon would earn $3 per share in 2013 in this scenario. Twenty times that figure gets us a share price of $60, versus today's quote of $57. Even if the company hits these assumptions, shareholders will make a total return of 5% (only 1% per year!) over the next five years. I would be willing to bet the S&P 500 index far outpaces that rate over that time.

Obviously these assumptions could prove inaccurate, but I think this exercise is helpful in illustrating how hard it is for stocks that trade at lofty valuations to generate strong returns over the long term.

There is one interesting thing about Amazon's business that I think is worth pointing out. You may recall that one of the bullish arguments for an online retailer like Amazon was that they could have a lower cost structure by eliminating the expenses associated with renting and operating large brick and mortar storefronts. Having a 100% online presence was supposed to result in higher profit margins, and therefore investors could justify paying more for Amazon's stock.

It seems that argument has not been realized. Amazon's operating margins in 2008 were 4.3%. If we look at brick and mortar retailers that are similar in business line and/or size, we find that Amazon's margins are actually lower than their offline competitors. Here is a sample list: Kohls (KSS) 9.9%, JC Penney (JCP) 7.6%, Macy's (M) 7.2%, Target (TGT) 7.8%, and Best Buy (BBY) 4.6%.

Maybe online retailers have to spend more on research and development and call center staff than offline stores do, thereby cutting into the margin advantage. Amazon also offers free shipping on orders of $25 or more, which many say they could eliminate to boost profits. Maybe so, but sales would be affected to some degree if they did that, not to mention customer loyalty.

Nonetheless, to me these statistics help make the case that a 38 P/E for Amazon is way too high. As a result, returns to Amazon shareholders over the next several years could very well be unimpressive, just as was the case with Starbucks five years ago.

Full Disclosure: Peridot Capital was long Best Buy and Target at the time of writing, but positions may change at any time

Anheuser-Busch InBev Poised To Rebound After 85% Collapse

As you may have already read in Business Week's 2009 Investment Outlook issue (dated 12/29-1/5), I highlighted the recently formed Anheuser-Busch InBev (AHBIF) as a potentially attractive bargain pick. Despite various other mergers failing to get done in the current credit environment, Belgium's InBev paid $52 billion in cash to acquire Anheuser-Busch. Fearing that borrowing the money to get the deal done would prove overly aggressive, InBev's stock simply cratered in the months leading up to the deal, and shortly after it was completed.

In addition to the plan to borrow the entire $52 billion, InBev's plan to repay $10 billion of that loan right away via a rights offering proved much more ominous than once thought. With InBev's stock price collapsing (the stock peaked at US$95 and fell all the way to US$14), the number of new shares needed to be sold to raise $10 billion of capital greatly increased. In fact, InBev sold about 1 billion new shares which was far greater than the 600 million shares outstanding before the buyout. All of the sudden, InBev shareholders were diluted by more than 60%, which was a main reason why the bottom fell out of the stock shortly after the buyout was completed.

While the dilution certainly was much more than anyone expected, the business prospects for the combined company have not really changed, which is at the heart of why I think there is a good chance they can actually pay back the loans successfully. Beer sales worldwide are not going to be dramatically affected by the global recession and lower commodity prices could even help boost margins as input costs decline.

Through the first nine months of 2008, Anheuser-Busch was on pace for annual EBITDA of about $3.9 billion, with InBev tacking on another 5 billion euros. That comes to nearly 7.5 billion euros of annual EBITDA before accounting for any cost synergies. Assuming the A-B portion could see an improvement in profitability due to cost cuts, there is reason to think the combined company could have annual EBITDA of more than 8 billion euros. To see how I get to that number, I have included the following chart:

Comparable large, dominant, global beverage brands fetch about 10 times cash flow in the public markets so an enterprise value of 80 billion euro is not an unreasonable valuation in my eyes. The catch, of course, is the tremendous debt load InBev took on to become the most dominant beer company in the world.

The companies had more than $7 billion in net debt before the transaction. Even after 20% of the $52 billion load is repaid with proceeds from the new stock sale, Anheuser-Busch InBev remains saddled with about 40 billion euro of net debt, which accounts for half of the projected enterprise value of the company. At the current point in time, that translates into a little more than $24 per AHBIF share. After rising from a low of $14 in recent weeks, the stock trades in the low 20's already.

Is there any upside left then? Well, leverage works both ways. If you take on too much debt and your cash flow sinks, you might be left holding the bag. On the other hand, if your cash flow is strong, you can repay debt fairly quickly. There is no doubt that 40 billion euros of debt sounds like a huge number, but it is more reasonable if you are bringing in 8 billion euro of EBITDA annually.

Now, it is true that all of that money cannot go toward the debt (which would wipe it out in five years), due to ongoing capital expenditure requirements. That said, Anheuser-Busch reinvests about 20% of its cash flow into the business, so they were on pace to have free cash flow of $3 billion in 2008 after reinvesting $750 million back into the business. InBev was even bigger than A-B before the merger, so free cash flow should be immense.

Assuming AHBIF reinvests 20% of operating cash flow into the business and uses the remaining 80% to repay debt, the current 40 billion euro debt load could be reduced by half within several years. At current prices, AHBIF stock could return more than 50% in 3 years, which equates to a 15% average annual return.

I have ignored taxes in this example, but fortunately the company's interest expense will wipe out much of their taxable income. To offset that variable, I also did not factor in any proceeds from asset divestitures that are likely to be completed to help with the deleveraging process. Anheuser's entertainment division (think Busch Gardens, etc) as well as their packaging division are often rumored to potentially be on the selling block. Proceeds would be used for interest and debt payments. As a result, while the numbers I have used will not prove to be exact, a net debt to EBITDA ratio of 5:1, while high, seems manageable given the strength of the combined company's business.

Note: Anheuser-Busch InBev stock trades on the Brussels exchange and recently fetched about 16 euros. Investors without access to international exchanges can buy the stock over the counter under the symbol AHBIF for around 23 dollars, but currency fluctuations will impact the dollar price, which is based on the euro quote and the prevailing exchange rate.

Full Disclosure: Peridot was long shares of Anheuser-Busch InBev at the time of writing, but positions may change at any time

Chad's Stock Idea for the Annual Business Week Investment Outlook Issue

The annual Business Week Investment Outlook issue (dated 12/29-1/5) is out and I was asked to contribute a bargain investment idea from the currently depressed market. My pick (on page 58) was Anheuser-Busch InBev. I am on vacation through 12/27 but I will write about this newly created beer giant in more detail when I return. For those of you who do not have access to the magazine, I made a PDF file:

Business Week Investment Outlook - 12-29-08 (Page 58)

Despite Recent Weakness, Buffett's Berkshire Hits Buyout Trifecta

UPDATE: 7/14 11:45AM

It has been brought to my attention that Berkshire does not own shares of Rohm & Haas. For some reason I incorrectly thought it did. Maybe Buffett used to own some of it, or maybe I just got confused some other way. At any rate, my apologies. Obviously, 2/3 of this post still applies, but just ignore the ROH part. Sorry for the confusion!

Things have not been great lately for Warren Buffett and Berkshire Hathaway (BRKA) shareholders. BRK stock has dropped more than 20% since December and large Buffett holdings in the financial services area such as American Express, Wells Fargo, Moody's, and U.S. Bancorp are hurting his equity portfolio. Buffett has also taken some heat for publicly bashing the use of derivatives, but privately writing billions in credit default swaps.

Despite the recent headwinds, you may have noticed that Buffett is still hitting some home runs. Just this year three Buffett investments have received takeover offers, all at significant premiums of 50% to 80%. What is amazing to me has been the prices offered for some of these companies. For instance, Mars is paying 32 times 2008 earnings for Wrigley (WWY). Dow Chemical (DOW) just offered a staggering 11.5 times EBITDA for chemical company Rohm and Haas (ROH).

Those are hefty prices by any measure, so I will be interested to see how smart those deals turn out to be several years from now. Buffett, for one, seems to think $80 per share is a bit steep for Wrigley. He is selling his stake to Mars for $80 per share, providing financing for the deal, and after the deal closes he inked a deal to buy a stake in the Wrigley subsidiary at a discount to the $80 purchase price. Not a bad deal if you can get it.

Full Disclosure: The author and/or his clients were long shares of Anheuser-Busch and U.S. Bancorp for investment purposes, and Wrigley as a merger arbitrage play, at the time of writing

Anheuser-Busch Lawsuit Appears Defensive, Friendly Deal More Likely

News this week that beer giant Anheuser-Busch (BUD) was suing InBev, claiming that its hostile takeover attempt was illegal, looked surprising desperate to me this early in the game. A report out of the New York Times insists that A-B is now in friendly negotiations with InBev about a merger.

What this tells me is that shareholders are lining up with InBev, most likely including Warren Buffett. If that is the case, A-B probably realizes that it would have little chance of convincing 51% of its shareholders to rebuff InBev. If after putting feelers out there that is the conclusion A-B has reached, the friendly negotiations reported by the Times make sense.

Here's why. The biggest worry in St. Louis is what type of cost cutting program InBev has in mind for the brewer's headquarters and other brand building attractions that don't necessarily contribute to the bottom line. If A-B's board accepts a seat at the table, they can directly negotiate these important points and get promises, in writing, as to what will happen if the two companies were to merge.

If shareholders are really on board for this deal, and they have the final say in this case since A-B has little in the way of takeover defenses, you may as well go out on your own terms.

Full Disclosure: Long shares of Anheuser-Busch at the time of writing

Anheuser-Busch Chooses to Mimic Yahoo's Rebuff Strategy

After seeing that Yahoo (YHOO) was able to reject a hostile bid from Microsoft (MSFT), claiming the offer was "inadequate" despite the fact that it clearly was quite adequate, Anheuser-Busch (BUD) has apparently decided to use the same approach in its battle with InBev. BUD officially rejected the deal yesterday, and in a conference call with employees today outlined its own plan to boost shareholder value.

BUD will seek to cut 10 to 15 percent of its workforce through attrition and early retirement offers, as part of a plan to cut costs by $1 billion over the next two years, twice the amount originally planned before InBev's bid. The company forecasted 2008 earnings per share of $3.13 (roughly in line with current estimates of $3.10), but offered a 2009 target of $3.90 per share, far above the current consensus of about $3.30. As a result, BUD stock is up today, in a down market, to $62 and change.

Does all of this remind anyone of Yahoo? I think both companies were not really being run with shareholders' interest being of utmost importance. As a result, a hostile bidder came along, knowing full well they could reap some serious operational improvement from the target company. In order to fend off the offer, the target firms claims the offer is inadequate and all of the sudden come up with all kinds of new ways to boost shareholder value.

The frustrating thing about this from an investor standpoint is that both Yahoo and Anheuser-Busch saw no reason to boost shareholder value on their own, despite the fact that such a goal is supposed to be their chief mandate. If A-B can really earn $3.90 next year by reducing its workforce and cutting costs, then why didn't they announce plans to do so before this InBev bid came along? If you can earn $3.90 and not tarnish your company, then why not do it?

Without InBev, BUD shares hovered around $50 for years. All of the sudden, BUD thinks it can earn $3.90 in 2009, instead of $3.30. If that is actually true (promising something when your company is under attack is different from delivering on the promise), you can easily argue that BUD stock is worth $60 on a standalone basis (15-16 times earnings). All of the sudden InBev's $65 offer is not as overwhelming as it appears to be.

Why it takes hostile takeover offers to get some management teams to do their jobs is beyond me, but it is quite frustrating to say the least.

Full Disclosure: Peridot clients owned BUD shares prior to InBev's hostile bid. Since the bid was made, some of those shares have been sold, but partial long positions remained in those clients' accounts at the time of writing.

Bid For Anheuser-Busch Really Hits Home

After being born and raised in Baltimore, I traveled out to St. Louis for college and subsequently spent a decade there. The long rumored InBev hostile merger offer for American icon Anheuser-Busch (BUD) came true on Wednesday, as the maker of Budweiser confirmed they had received an unsolicited $65 cash bid.

InBev has a reputation for buying up competitors and slashing costs (read: jobs) to boost efficiencies, profit margins, and as a result, its stock price. As a result, news of this bid really hits home and comes with very mixed emotions. My company owns shares of BUD for some of its clients, so that is good from an investment standpoint, but that about the only positive I can see from my perch.

I have friends who work at the A-B (as it's known locally) global headquarters in St. Louis so their job security is in question all of the sudden. Whether it be Busch Stadium (home of the Cardinals), Grant's Farm, or the St. Louis Zoo (free to the public thanks to subsidies from BUD), the city really would take a hit if an InBev/A-B combination resulted in dramatic change.

Upon seeing the press release yesterday afternoon, I quickly sent off an email to a client and close friend working there, to which he replied with a single line:

"Top 5 worst news I've received in my life."

This hostile battle is going to get ugly. BUD will have shareholders who want to take the deal and employees, supporters, and customers who will be firmly against it. After seeing another company with very little leverage turn down an excellent bid (Yahoo), it is certainly possible that A-B could rebuff InBev, although doing so will draw lots of commotion within the investment community.

As you can see from the chart below, BUD shareholders have not had much to smile about this decade, and this deal certainly would boost earnings and the combination's share price.

The question is, at what cost? Would the brand be tarnished in any way if InBev's cost cutting managers arrived on the St. Louis campus? It is hard to know.

Normally, as an investment manager I would be jumping for joy at the possibility of getting $65 for shares that not too long ago traded in the high 40's. But this is far from a normal situation for many of us with direct or indirect ties to the company.

For non St. Louisans, the key question is what to do with the stock (now trading at 63 and change in pre-market trading). Given the local disapproval of a deal, coupled with it being an election year and oversea buyouts/job loss being a hot button political issue, I would say the odds of a consummated deal are no better than 50/50 at this point.

Given that the stock was hovering around $50 before InBev rumors started, and an eventual deal could range between $65 and $70 (if they are forced to sweeten the offer to secure BUD), an expected value on the stock sits in the $58-$60 range. With a current price in the $63 area, it seems reasonable to consider selling a portion to lock in gains and guard against a blocked deal, which could certainly happen.

Full Disclosure: Long shares of BUD at the time of writing

Are All Consumers in the Same Boat?

Last weekend I attended some festivities for a friend's birthday that included dinner at the Landmark Buffet at the Ameristar Casino and Hotel (ASCA) in St. Charles, Missouri. Along with spending some time with good friends, I was also especially interested to see how busy the casino was on a Friday night. If you simply looked at the stock prices of the major casino companies in the United States, you would have predicted the place would be empty. Gaming stocks have been crushed lately on consumer spending worries. ASCA stock, for example, is down about 45%, from a high of $38 to the current quote of $21 per share.

Such large drops are fairly surprising given that gaming stocks are widely believed to be fairly recession-proof. Rather than take lavish vacations, or even hop on a plane heading to Vegas, people tend to scale back and just drive to a local riverboat casino instead. Despite the typical feeling that gaming holds up okay in recession, the casino stocks this time around have really taken it on the chin, so investors are clearly betting that this time is different.

Surprisingly, the Ameristar Casino was as crowded last Friday as I have ever seen it. At the buffet, for example, people are still standing in line for at least an hour for a $21.99 crab leg, steak, and shrimp dinner. After seeing such a large crowd, I came to the conclusion that the health of the consumer likely depends largely on where the person lives. Here in the Midwest, the housing market downturn has been less severe because it never really got crazy to start with. Compared with hot areas like California, Nevada, Arizona, and Florida, states like Missouri had much more subdued housing speculation.

The result of that is that things aren't that bad here. You don't hear about huge numbers of foreclosures or see evidence that the consumer is largely tapped out. The main problem here with respect to housing is simply a supply-demand imbalance. There is still a decent amount of building going on, in the face of high levels of for-sale signs out already, so houses aren't selling. However, people are simply sitting on them, reluctant to lower prices to motivate buyers, much like other places across the country. But without extreme speculative activity, the negative impact on consumer spending does not appear to be as drastic as other places across the nation.

How can we make investment decisions based on this? Well, my opinion is that many consumer related stocks have been beaten down way too much. Companies focused on the roughest housing markets will likely see the brunt of the negative impact. Other areas such as the Midwest will likely hold up well on a relative basis. For a company like Ameristar, which owns properties in Missouri, Nebraska, and Mississippi, things might wind up being okay.

Additionally, the upscale consumer sector should still do relatively well. Sure, things will slow down, but the high end of the market will drop off less than the lower end, and likely will rebound faster once things turn around. After all, rich people probably aren't scaling back too much due to elevated inflation levels.

One other area I think is poised to hold up well is the restaurant sector. Wall Street is bracing for people to stop eating out during the current economic downturn, but I would argue that eating out is due more to a secular shift in behavior than a bi-product of easy credit. People nowadays work longer hours than they used to and have less time to make dinner every night. I'm not saying dining spending won't drop when things get tough, but I think if you look at the hits the stocks have taken and what that implies about business expectations, things won't be nearly as bad as investors are pricing into the stock prices of restaurant chains.

All in all, I think investors should differentiate between the varying degrees of consumer stocks. A lower end company operating in California or Florida is going to fare differently than a high end company in the Midwest. A Vegas casino might not do as well as one based in St. Charles, MO in uncertain economic times. Traffic declines at a clothing retailer will likely be more dramatic than at a restaurant chain, if indeed eating out is a decision made for convenience more than monetary reasons. A new wardrobe is much easier to postpone than making time to prepare dinner at home.

As we allocate money to the consumer discretionary sector, it might serve us well to think about these things.

Full Disclosure: No position in ASCA at the time of writing

Book Review: Grande Expectations - A Year in the Life of Starbucks' Stock

Recently I was asked if I would consider reviewing a new book about coffee giant Starbucks (SBUX) entitled Grande Expectations - A Year in the Life of Starbucks' Stock. I am not a shareholder in the company, but I am very familiar with the loyal customer base they have been able to amass over the last fifteen years or so since the company's 1992 IPO. Although I am not a coffee drinker, my mother is among the millions who rarely go a day without visiting the neighborhood Starbucks store.

One of the reasons I agreed to read and review the book is because the performance of Starbucks over the last three years has been a valuable lesson for growth stock investors and I was curious to see what conclusions the author, Karen Blumenthal, would draw based on her research. As you may know, Starbucks shares have been dead money since late 2004 despite the company's continued growth. Even in the face of the chain's 20% annual growth rate, investors have been disappointed in recent years mainly because although growth has been strong, the stock's P/E has been compressing, which more than offset any earnings growth.

Blumenthal essentially devoted a year to following Starbucks. She visited investors (both retail and professional), attended the annual meeting, met with analysts, and spoke directly with the company's management team, all in an effort to find out what kept the Starbucks story ticking and what issues the company and its investors faced every day.

After reading Grande Expectations, it seems to me that there would be three main groups of people who might be intrigued by the work. The first group is the most obvious, Starbucks enthusiasts. The book does a great job of giving readers an inside look at the company's history, how it operates, and what exactly management spends most of their time thinking about. If you want an insider's perspective, Grande Expectations will likely be an enjoyable read.

The book is also being marketed as a investor tool to provide "unique lessons in understanding how the market really works." On this end, I think it is important to distinguish between which type of investor would benefit from the book. I would recommend Grande Expectations for beginner investors who want to learn more about the basics of how the stock market works, how the industry players are related, and how various segments of the investment advisory business (research analysts, retail shareholders, mutual fund managers, etc) play a role in the investment process.

Blumenthal spends a good deal of time talking not about Starbucks specifically, but how, for instance, a research analyst following the company does his/her job, or how a mutual fund manager decides to buy or sell the shares. If you are interested in learning more about these players, in addition to learning about Starbucks specifically, then the book could be valuable.

Aside from Starbucks watchers and novice investors, I don't think experienced investors, professional or individual, would learn a lot from the behind-the-scenes look the book offers. These people, myself included, already know how the industry operates and I found myself skimming through some of the book, including parts like one that explained Reg FD or the supposed wall between investment banking and sell-side research analysts. If you are looking for new insights as to how the pros do their jobs, in hopes that it will enable you to boost your investment returns, I would say that would only be case if you are not already an experienced investor.

Surprisingly (or not surprisingly given the author is a journalist, not an investor) the book really does not focus much on the reason why Starbucks stock has underperformed in recent years (P/E compression). Most of the investors cited in the book admit the P/E is high, but continue to hold or buy the stock because of the company's consistent growth. This logic can be acceptable to an extent, and is the reason why Starbucks deserves an above-market multiple, but paying 40 or 50 times earnings eventually will come back to haunt you. Investors have seen this firsthand during the last three years as shares have moved sideways due to P/E compression completely offsetting earnings growth.

All in all, this book provides excellent insights for novice investors and loyal followers of Starbucks, but falls short in providing extremely valuable investment insights that could not be found in most other investing books already on the market. As a result, I would expect other reviews to be mixed depending on which perspective the reader has on Starbucks stock.