Howard Schultz, interim CEO of Starbucks (SBUX), recently added 137,500 shares. The buy increased his holdings by 0.6 percent, and came to a total purchase price of just under $10 million.
This marks the first insider buy at the company over the past three years. Otherwise, company executives and directors alike have been regular sellers of shares of the beverage chain giant. The buy comes following the company’s latest earnings, and as Schultz takes up the CEO role for the third time.
Overall, company insiders own a scant 0.2 percent of shares.
The stock is down 32 percent over the past year, performing about 10 times worse than the S&P 500 right now. That’s in spite of 31 percent earnings growth and 19 percent revenue growth over the same time.
This mismatch in upward fundamentals and a lowered price has taken shares from 191 times earnings last year to under 19 times earnings today.
Action to take: Shares may still have some short-term downside in today’s markets. But the company isn’t going bankrupt, and under Schultz twice before the company has been able to refocus and increase growth and profit margins. Plus, at today’s prices, the stock yields 2.6 percent and has become a dividend growth play.
For traders, the October $85 calls, last going for about $3.10, hit that sweet spot of having a few months to play out where they can deliver mid-to-high double-digit gains.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.