Ahead of Earnings, Buy the Dip in Starbucks Stock

Since mid-April, all’s been quiet for
Starbucks
(NASDAQ:
SBUX
), at least in the equity market. SBUX stock saw a brief rally in early June, but that aside has stalled out.
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I expect that will change soon — and possibly next week. Starbucks reports fiscal third-quarter earnings on Tuesday afternoon. And that release should be a catalyst for Starbucks stock.
To be sure, the numbers in the U.S. are going to be soft. But as economies worldwide reopen, Starbucks should see improvement. That’s particularly true in China, a key market for the company and one with a suddenlywounded competitor.
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This is not a quarter that, fundamentally, will look impressive. But I expect there will be enough to remind investors that Starbucks is one of the world’s great companies. With SBUX stock down about 17% year-to-date, that should be more than enough.
Business Should Improve
Again, consolidated third quarter numbers are not going to look impressive. In fact, they’ll likely be downright ugly. Wall Street expects revenue todecline a stunning 40%year-over-year.
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Of course, that’s not a surprise. Starbucks stores were closed for several weeks in the quarter. Even after reopening, locations are operating atreduced hours. Like
McDonald’s
(NYSE:
MCD