Starbucks compels, but ...

I confess, most of my down time outside of home is spent in ... uhh ... well ... Starbucks.

Aside from the hours spent stuck in traffic, Starbucks is the one place I return to at least twice a week. They're everywhere, at least here on Oahu. It's also one of the few places that'll let me plug my laptop in and hang out for an hour, two hours, even three hours. Most times I get a hot cocoa or ice tea, maybe two. I'm not a total cheapskate.

And yet, as well as I think I know the ambience, service and products of Starbucks, I've yet to buy a single share. Starbucks has grown up all right, and is approaching the weight of a Coca Cola or McDonald's. Shifting its weight around is difficult at this size, unlike smaller, younger, more nimble growth companies. So why is Georges Yared still gung ho about SBUX?

In his piece at BloggingStocks.com, Yared points to the Co's goal of expanding from 13,000 stores to 40,000. Much of that growth, of course, will be overseas. India. China. There are already many tales of how young adults in China use Starbucks as a hangout place in lieu of nightclubs and bars. The growth in China is incredibly important to the future growth of the Co, of course, and pleasing Chinese customers is key.

I don't see CEO Howard Schultz missing the boat on this opportunity. If the Chinese want more tea than coffee, so be it. The stock, though, was at an all-time high less than a year ago. Growth slowed, though, and there wasn't enough justification to consider a buy over $35, or even $30. A buy at $26 is what I thought, but didn't expect.

Today, SBUX closed at $26.08, up from a 52-week low of $25.22 on June 25. Remarkably, the P/E is 32, and I have to wonder, is this the real bottom? Maybe.

The more important question is, where will SBUX be in a year? Will growth in China show up on the bottom line really, really soon? As surely as Starbucks grows into China, so will McDonald's, and the Golden Arches promise to be as much of a foe there as they are here.

So, with respect to Yared, one of my favorite, most progressive stock writers, I'll take a pass on SBUX until some numbers come out. It's worth noting, though, that just about every growth stock I love has some kind of relationship to China. Baidu. Sina. Focus Media. Shanda Interactive. CNOOC.

But if I buy what I know, I should get SBUX. Wonder if they could set up some Crocs kiosks in the Chinese Starbucks stores. Hmmm...

Disclaimer: Pupule Paul has no position in SBUX, but is long CROX.