Update On 2 Stocks I Recommended
Boeing and Starbucks, two iconic American brands with new CEOs and a new strategy. Both companies recently reported earnings and I provide an update on where things stand.
Today an update on two stocks I recommended last year.
Both just reported earnings, so let’s get into it …
Boeing BA 0.00%↑
First of all - thoughts are with all the families involved in the tragic events involving aircraft over the past few weeks.
As investors, tragic events will always be a risk with Boeing. But this week proved it’s not unique to Boeing. While far less tragic, DeepSeek took down the largest names in semiconductors - so there’s always risks out there.
As single stocks investors, you just need to live with it.
We recommended Boeing stock back in December.
Right away I got a ton of blowback from readers/viewers saying that no way Boeing was a good stock to buy.
That’s usually a good sign that a stock has reached a turning point.
Not a scientific measure by any means, but over the years I’ve noticed when retail investors are totally turned off by a stock - it’s worth looking into.
The opposite is also true. If retail is in love with a stock - probably a good time to take some profits.
But let’s be real.
There’s still a long road ahead for Boeing.
Financially the company is a disaster. Not being able to deliver planes is doing exactly what you’d expect. Driving up debt and draining cash.
But things appear to be (slowly) getting on the right track.
As you’ll recall the company has a massive ($500B+) backlog of 737 MAX aircraft due to tragic accidents that caused the FAA to ground the plane.
737 MAX production is capped at 30 per month.
The CEO said the FAA is going to increase the total to 38 which is obviously a good thing. After that, Boeing expects to expand to 42 aircraft per month by the end of the year.
The thing to remember is that Boeing has some 737 MAX planes already built, sitting in inventory, along with an inventory of parts.
Once the FAA clears the company for higher delivery numbers, that has an immediate impact since the company is ready to deliver these planes.
2025 will be on the razors edge though.
Margins are expected to be negative.
The company is optimistic about 2026, but obviously there’s no guarantees.
Any slip up in 2025 and it derails Boeing for another year or more.
That makes Boeing a very risky blue chip turnaround investment.
Normally I’m not into turnaround stories, but this one is worth it because the upside is massive if they can pull it off.
In essence it’s a blue chip name, but with small cap upside if it can pull off the turnaround.
The outcome is likely binary as well. Boeing will either take off or not. You have to be comfortable with that if you invest in the stock.
Starbucks SBUX 0.00%↑
One thing I get asked all the time is how do you find good stocks to invest in?
I always have the same answer …
Don’t look for great stocks, look for great leaders.
Great leaders always have great stock performance.
Starbucks new CEO Brian Niccol is an absolute bonafide superstar.
Very quickly he laid out his vision for Starbucks - which is a sign of a great leader.
Niccol has a “Back to Starbucks” mission that is moving the company back to many of the things that made the brand great.
The mission includes:
Bringing back ceramic mugs
Sharpies
More comfortable seating
Cleaners stores meant for customers only
A separate line for takeout/mobile orders
Less customization options
A separate condiment bar for cream/sugar self service
All of it is designed to bring Starbucks back to where it began and make it more efficient.
Some highlights from the most recent Q1 earnings call were:
40% fewer discounted transactions as SBUX pulled back on coupons in an effort to drive full price sales.
Aims to reduce food/beverage SKUs by 30% in 2025
New store technology for staffing and drink making to serve drinks in 4 minuets or less.
Believes Starbucks can double US store count (!!!)
90% of new management roles will come from existing employees.
Was vague on China business. Said they had several changes to be made, but didn’t go into detail.
What Starbucks is doing on the advertising front has some lessons as well. These apply to another stock in a similar situation - and that is Nike NKE 0.00%↑
Both companies have new CEOs after the previous ones failed on many levels. One area where both Starbucks and Nike previously failed was advertising promotions.
This is called “performance advertising” where you are trying to drive a specific action like buying something on sale or taking advantage of a discount.
This is a poor advertising strategy for high level brands.
Instead, what has proven to work over and over is what’s sometimes referred to as “brand” advertising.
For Nike - it’s Michael Jordan dunking the ball.
For Starbucks is showing off the coffee and the experience.
Short term you’re not going to see a return, but long term this is how these companies should advertise.
Look at Starbucks’ latest 30 second commercial.
Doesn’t advertise a new flavor or menu option.
To some investors this seems like a nothingburger.
But spend any amount of time in advertising circles like I have - and this is EXACLY the ads Starbucks should be running.
Negatives from the Q1 was the lack of details on China. I realize that Niccol hasn’t been CEO all that long, but seems like he’s got a clear plan here in the US - but China he only provided a brief prepared remark.
Since we recommend buying SBUX earlier this year shares have run about 20%. I’d anticipate pull backs as the spend on marketing and Capex to revamp stores will hit the financials more later this year. Niccol’s done a nice job telegraphing this - so it’s possible Wall Street won’t care.
I posted earnings videos for several other companies as well:
We’re getting close to launching Blue Chip Stock Investor paid membership. I believe we’ll on track to be live in February. These earnings updates (along with lots more) will be part of the service. I’ll keep you updated as we get closer.
Hope things are good, see you on the YouTube Channel for more earnings this week.
Colin
Follow Me on X: https://x.com/InvestorVideos
Follow Me on Instagram: https://www.instagram.com/investorvideos/
Thanks colin!! Love the work you do and value you provide :)
Your thoroughness and honesty is to be commended.