Fueled by Starbucks, SWS team wins competition

Areas of Study , Event Recaps , Finance , Smart Woman Securities , Stories Student Organizations & Clubs | Dec 06, 2011 | Nicole Gesualdo

Here’s advice from four members of Gabelli’s chapter of Smart Woman Securities: Starbucks is worth buying — for more than gingerbread lattes. These investors consider its stock a wise acquisition.

For this semester’s Smart Woman Securities campus investment competition, Farzana Ali (GSB ’15), Roxy Derrington (GSB ’14), Sarah Hill (GSB ’14) and Bridget Dalton (GSB ’13) researched the Starbucks stock — compiling an analysis of the company’s past stock performance, market competition, brand recognition, growth potential, current finances and other factors — and made a presentation to three alumni judges, rating Starbucks a buy. The students’ work earned them first place in the competition, which also is the rite of passage by which new members are inducted into SWS. The Gabelli chapter welcomed 20 new members through this year’s contest.

Members of the Starbucks SWS team with contest judge Maura McGourty-Poiesz, center.

Farzana, Roxy, Sarah and Bridget found motivation in their own cups of coffee. “As loyal Starbucks customers,” Sarah said, “the team felt it would be interesting to delve deeper into the inner financial workings of a company we each are familiar with and love.” They went up against rival teams that focused their investigations on Whole Foods, AT&T and Apple.

It was an interesting time for the students to take a closer look at Starbucks: As Sarah pointed out, the company’s acquisition of Evolution Fresh was about to launch it into the U.S. juice market, valued at $1.5 billion, which lies in the context of the larger health and wellness sector, valued at $50 billion. To develop their analysis, the team members used skills they had learned in the integrated projects they did for the new business core: Those projects also required a close look at the income statement, balance sheet and cash flow for a corporation. “But for SWS,” Sarah explained, “we were required to take an extra step and make an investment recommendation — buy, sell or hold — to a panel of judges, which required an understanding of financial metrics such as P/E ratios, profit and operating margins, and EPS.”

The team’s performance impressed the alumni judges: Thomas Humphrey (FCRH ’82), partner and head of marketing and client development at Golden Tree Asset Management; Maura McGourty-Poiesz (FCRH ’90, GBA ’92), vice president and branch manager for Morgan Stanley Smith Barney; and Sean Reed (FCRH ’90), practice leader in the insurance and financial services area of New York Life Insurance Company. We at Gabelli are proud of Bridget, Farzana, Roxy, Sarah and the other members of SWS who participated.