Investor Reevaluates Starbucks (SBUX) After Disappointing Performance, Considers Arcos Dorados (ARCO)
A seasoned investor, who bought Starbucks (SBUX) in June 2020, is reassessing their portfolio. Despite expecting growth and income, the stock's performance has been disappointing, particularly in China. Now, they're considering selling and replacing it with a more promising option like Arcos Dorados.
Starbucks' business in China, once a major growth driver, has struggled to rebound from the pandemic. The investor, who has seen the company's dividend yield rise to nearly 3%, is now questioning its role in their portfolio. The stock's compound annual growth rate (CAGR) for revenue has been in single digits for years, which may not be enough to outpace the market.
Meanwhile, Arcos Dorados (ARCO), the largest independent McDonald's franchisee in Latin America and the Caribbean, has shown promising growth. With over 2,400 locations and a 3.5% dividend yield, the company reported 15% revenue growth in the second quarter of 2025. Another option is Academy Sports & Outdoors (ASO), a sporting goods retailer planning to open up to 25 new stores this year and 150 by 2028, potentially driving double-digit growth. While Academy Sports offers a 1% dividend yield, it returns cash to shareholders through stock buybacks and dividend growth.
Starbucks' new CEO, Brian Niccol, is attempting to revitalize the brand by closing underperforming locations and enhancing the coffeehouse experience. However, the investor is not rushing their decision, weighing the potential turnaround against other opportunities.
The investor, who initially bought Starbucks for its growth and income prospects, is now considering selling the stock due to its lacklustre performance. They're evaluating replacements like Arcos Dorados and Academy Sports, which offer promising growth and dividend potential. The final decision will depend on how Starbucks' turnaround efforts pan out and the investor's overall portfolio strategy.
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