2 Reasons Investors Should Love Starbucks Corp. in 2015

By Markets Fool.com

Starbucks seems bent on world domination these days. Even with shares now trading within cents of the stock's 52-week high, according to S&P Capital IQ, investors shouldn't bet against the coffee retailer in 2015. The stock was trading north of $89 a pop on Friday, but the two catalysts discussed below could push Starbucks even higher in the year ahead.

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Best-in-class mobile strategy
Many brick-and-mortar retailers like to claim they're on top of the mobile-payments movement. However, Starbucks is truly a leader when it comes to the convergence of retail and mobile technology today. Thanks to the ongoing success of its mobile app and Starbucks digital, the java giant recently delivered its most successful holiday in the company's 40-plus year history.

During the company's fiscal 2015 first quarter, Starbucks generated nearly 9 million more customer transactions in its U.S. stores than it did during the same period a year ago, and more than 12 million globally. Additionally, more than 13 million consumers now use Starbucks mobile app in the U.S., with mobile accounting for as much as 16% of the company's sales in the first quarter. This is more than any other brick-and-mortar retailer in the market today, as Howard Schultz, Starbucks CEO, was quick to point out on the Q1 conference call.

Nevertheless, Starbucks isn't resting on its laurels. It recently introduced "Mobile Order & Pay" in 150 Starbucks locations throughout Portland, to great success. The service lets customers place their orders ahead of time on their mobile device and then pick them up in the store. The company plans to roll out the service in more than 600 locations in the Pacific Northwest in the months ahead, with a national launch to follow.

This, together with Starbucks' existing mobile and digital platforms, should fuel sales growth in the year ahead. As Schultz puts it: "Our experience to-date confirms that once fully rolled out, Mobile Order and Pay will drive a significant increase in mobile payment transaction in our stores overall and have a flywheel positive effect on our overall business, driving both increased MSR membership and app usage and creating significant additional one-to-one marketing opportunities."

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Diversifying its product offerings
Expanding outside of its core coffee offering and into both food and tea is another strategic initiative that should pay off for Starbucks in 2015. The company is already seeing an uptick in revenue from sales of tea beveragesin its stores, and management is confident it can double tea revenue to roughly $2 billion during the next five years. With the full integration of La Boulange, food is also driving sales growth for Starbucks outside of its core coffee business.

In fact, food recently contributed 2% to Starbucks same-store sales growth for the fourth consecutive quarter. Fresh food offerings also are helping Starbucks attract customers to its stores, not only at breakfast, but during other parts of the day such as lunch. During the three-month period ended in December, sales of Starbucks breakfast sandwiches grew 29% over the prior year. Meanwhile, sales of the company's lunch offerings were up 15% over fiscal 2014.

This is a promising start for a company that was founded on beverage offerings. Looking ahead, if Starbucks can continue to attract customers for lunch, it could take market share from fast-casual restaurant chains such as Panera.

A long runway of growth ahead
Starbucks already has a massive store footprint both domestically and abroad, with more than 17,000 locations operating in 65 countries today. However, the company continues to unlock new and exciting growth opportunities in areas such as mobile technology, new day parts, and fresh product categories.

It's also worth noting that Starbucks stock seems inexpensive, despite shares trading near the high-end of the stock's 52-week range. On a valuation basis, the stock looks attractive, with a price-to-earnings-growth value of 1.47-- below the industry average PEG of 2.19. Moreover, the stock is trading at just 27 times earnings, despite the promising growth opportunities on the horizon.

For these reasons, investors should love Starbucks for 2015 and beyond.

The article 2 Reasons Investors Should Love Starbucks Corp. in 2015 originally appeared on Fool.com.

Tamara Rutter owns shares of Panera Bread and Starbucks. The Motley Fool recommends Panera Bread and Starbucks. The Motley Fool owns shares of Panera Bread and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.