Coffee giant Starbucks (SBUX) has had its share of troubles lately, frantically trying to redesign itself as a warm, welcoming, friendly location that only occasionally writes insults on people’s drink cups for being affiliated with conservatives. Now, it has a whole new problem on its hands: Dollar Tree (DLTR). This unexpected complication set investors’ teeth on edge, and sent Starbucks shares down fractionally in Tuesday afternoon’s trading.
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So how in the world could Dollar Tree possibly compete with Starbucks? The answer is almost disturbingly simple. Dollar Tree, reports note, has an item called Victor Allen’s, a line of canned iced coffee latte drinks that offers some of the standard flavors. Caramel, mocha, peppermint mocha, and vanilla are all on hand, as well as some flavors that might surprise like Snickers and Twix.
Naturally, how much of a competitor this actually is will vary from person to person. Some might find the taste a little lacking, and others might balk at the 17 grams of sugar included in each serving. Others, however, will find the $1.25 per 11-ounce can price point a welcome relief from Starbucks prices. But there are actually other coffee options at Dollar Tree, including the high-protein Super Coffee that comes just as Starbucks was rolling out its own high-protein options.
The Midnight Cry
Meanwhile, students near Brown in Rhode Island found one of their own Starbucks locations part of the closures from Project Bloom. The location at 218 Thayer St. shut down, and left the area college students on the back foot. Some were surprised by the rapidity with which the store was closed, and others missed the “nice energy” the place had. Given Starbucks’ own plans to inject more “nice energy” into stores, that probably should have left this location off the chopping block.
But other students are looking forward to seeing what comes into that space next, hoping for a bar like the kind that was seen back in the early 2000s, even 2010s. And some share the feeling Pittsburgh had, with the Starbucks closure opening new opportunities for local coffeehouses to step in.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, six Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 14.66% loss in its share price over the past year, the average SBUX price target of $101.84 per share implies 25.06% upside potential.
