Starbucks Corp (NASDAQ:SBUX) is trading near all-time highs after closing a little under $99 last week. Despite the threat of more lockdowns with COVID-19 cases on the rise, investors remain bullish on the stock, as it's now erased all of its losses due to the pandemic.
However, the company hasn't made a full recovery yet as in the fourth quarter its comparable store sales were down 9% in its home market and even in China, where the pandemic's been more stable, comparable sales dropped by 3%. Although there was a 23% decline in comparable transactions, the company benefited from people making larger purchases with the average ticket up 17%.
Starbucks is expecting a big recovery in 2021, expecting growth to be well into double-digits, with global comparable store sales expected to grow by as much as 23%. But investors should be careful not to expect too much from the company next year.
Although things are going better for Starbucks, there's a real possibility that there may still be further lockdowns and that the worst is not yet behind the company. And with shares of Starbucks now trading at a forward price-to-earnings (P/E) multiple of 35, investors are paying a lofty premium for the stock. A year ago, its forward P/E was around 29.
Year to date, shares of Starbucks are up 12%, right in line with how the S&P 500's performed thus far. Although the company will do better over the long term, investors may want to wait for its shares to dip a bit before adding the stock to their portfolios.
