The Zacks Analyst Blog Highlights: Starbucks, Unilever, Hain Celestial Group, Red Robin Gourmet Burgers and Boeing
CHICAGO, Oct. 28, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Starbucks Corporation (Nasdaq:SBUX-Free Report), Unilever plc (NYSE:UL-Free Report), The Hain Celestial Group Inc. (Nasdaq:HAIN-Free Report), Red Robin Gourmet Burgers Inc. (Nasdaq:RRGB-Free Report) and The Boeing Company (NYSE:BA-Free Report).
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Here are highlights from Friday's Analyst Blog:
Starbucks Unveils Tea Bar in NYC
Coffee giantStarbucks Corporation (Nasdaq:SBUX-Free Report) unveiled its first ever tea bar in Manhattan, New York. The first-of-its-kind tea bar combines Starbucks' signature expertise in store design and customer experience along with Teavana's age-old proficiency in tea sourcing and blending.
The tea bar will offer a wide range of hot brewed and iced teas, tea lattes and distinctive sparkling and tea fusion beverages. The retailer will also serve pastries and breakfast items, salads, flatbreads, macaroons, shortbreads and other desserts. As per Associated Press, while the food items will range between $3 and $15, drinks will range from $3 to $6.
Starbucks acquired Teavana in Dec 2012 with the objective of capturing share of the $90 billion tea category. Teavana was a specialty retailer of tea, which operated only through mall-based stores. Starbucks opened a few stand-alone Teavana neighborhood stores, going beyond its mall-based focus).
The acquisition complemented Starbucks' core tea business of Tazo tea. Over time, Starbucks plans to create a two-tiered business, where both the Tazo and Teavana-branded products will co-exist within the CPG channel.
We are encouraged with Starbucks' endeavor in the tea business. The tea industry is thriving in the U.S. with the tea makers producing newer flavors, strengths and sweeteners. Moreover, the high product differentiation of tea enables the makers to earn high profit margins despite recessive conditions.
The ageing population of America is drawn to tea as the product is positively linked with health and disease prevention. As per market research firm, Euromonitor, the tea industry is projected to grow 10% in on-trade volume terms by 2017.
However, Starbucks' Teavana and Tazo tea will have to compete with major players like Unilever plc's (NYSE:UL-Free Report), R.C. Bigelow, The Hain Celestial Group Inc. (Nasdaq:HAIN-Free Report) and Tata Group. Moreover, we feel that the high-end teas might do well in markets like China, which is more accustomed to such teas, but it would be a challenge for Starbucks to popularize the drinks in the American market, which is more accustomed to coffee.
Starbucks currently holds a Zacks Rank #2 (Buy). Another stock in the retail restaurants worth considering are Red Robin Gourmet Burgers Inc. (Nasdaq:RRGB-Free Report) carrying a Zacks Rank #1 (Strong Buy).
Boeing Eyes Multi-Billion-Dollar China Orders
The Boeing Company (NYSE:BA-Free Report) is flying high on demand for its new fuel-efficient commercial planes from airlines around the world. The maturing U.S. airplane market, once deemed to be the largest, has had little impact on this commercial airplane maker. Any slowdown in demand in the U.S. has been more than compensated by a fast expanding Asian airplane market.
As per media reports, the plane maker has secured commitments from various Chinese customers for about 200 of its upgraded variant of the short-haul aircraft, the 737 Max. The deal, which is subject to the Chinese government's approval, has a combined value of $20.7 billion at list prices. This marks the first commitment for the 737 Max from China.
This staggering order came from a wide range of customers comprising China's state-owned airlines, China Aviation Supplies Holding Company, as well as leasing firms associated with the country's banks. We note that Air China, China Eastern Airlines and China Southern Airlines all operate the current models of Boeing's 737 in the country.
The fourth generation of the 737 family – the 737 Max – has been upgraded with new and more fuel efficient CFM International LEAP-1B engines. Boeing's 737 MAX, which competes with its European rival Airbus' A320 neo, has firm orders totaling 1,567 as of Sep 2013. From China alone, Boeing estimates delivery 3,900 single-aisle aircraft in the next two decades.
Meanwhile, Boeing also clinched a firm order from Korean Air Lines Co. in a deal worth $3.9 billion in list price to modernize its fleet. Particularly, the country's biggest carrier is buying five 747-8 Intercontinentals, five 777-300ERs and one 787 Dreamliner. The deal was approved by the board of Korean Air.
Korean Air currently has a fleet of 90 Boeing passenger airplanes mainly comprising the 737, 747 and 777 planes. The airline also uses Boeing's other aircraft like the 747-400, 747-8 and 777 Freighters. In fact, the airline's Aerospace unit is partnered with Boeing on both the 747-8 as well as 787 programs.
Adding to Boeing's swelling order book, the U.S. plane maker has reached an agreement recently to sell 20 Boeing 737-800 jets to Aerolineas Argentinas. The deal is worth $1.8 billion at list prices.
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