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Tim Seymour: Don't Underestimate Growth Potential of Starbucks

Shares of Starbucks slipped in extended trade after the java giant warned that rising fuel and dairy costs will take a bigger chunk out of earnings than previously anticipated, and offered a full-year forecast that disappointed Wall Street.

Also, Japan's earthquake March 11 and the bankruptcy of cafe partner Borders Group weighed on profit.

By the numbers, Starbucks forecast earnings of $1.46 to $1.48 a share for fiscal 2011, up marginally from $1.44 to $1.47 previously but below the $1.50 analysts had expected on average.

The coffee chain restarted profit growth in 2010 after a two-year restructuring that involved slashing costs and shuttering almost 1,000 cafes globally. Since then, investors have enjoyed quarterly profits that often topped analysts' views.

It’s also worth noting that Starbucks shares have risen around 60 percent since the beginning of 2010, but the company has warned that high coffee prices will trim profits this year.

How should you trade it?

Tim Seymour is bullish Starbucks. He tells the desk the java giant has a lot of growth potential. “They are not saturated overseas like they are here. That's exactly why you want to own Starbucks,” he says.


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Trader disclosure: On April 27, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders Karabell owns (AAPL); Karabell owns (CSCO); Karabell owns (GE); Karabell owns (GOOG); Karabell owns (IBM); Finerman and Finerman's firm own (AAPL); Finerman and Finerman's firm own (BP); Finerman owns (C); Finerman and Finerman's firm own (CVS); Finerman's firm owns (IBM); Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (JPM); Finerman and Finerman's firm own (MSFT); Finerman's firm owns (TGT); Finerman owns (UNG); Finerman owns (USO); Finerman's firm is short (IWM), (MDY), (SPY); Finerman's firm is long S&P 500 puts; Finerman's firm is long Russell 2000 puts; Grasso owns (AMD); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (C); Grasso owns (CSCO); Grasso owns (JPM); Grasso owns (FITB); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST)

For Zachary Karabell
River Twice Capital owns (AA)
River Twice Capital owns (DD)
River Twice Capital owns (GE)
River Twice Capital owns (JCI)
River Twice Capital is short (QQQQ)
River Twice Capital owns (QCOM)
River Twice Capital and Karabell own (POT)
River Twice Capital own (SBUX)
River Twice Capital and Karabell own(SLV)
River Twice Capital is short (SMH)
River Twice Capital is short (SPY)
River Twice Capital is short (XLF)

For Brian Kelly
Accounts Managed by Brian Kelly Capital own (GLD)
Accounts Managed by Brian Kelly Capital own (EBAY)
Accounts Managed by Brian Kelly Capital own (SLV)
Accounts Managed by Brian Kelly Capital own (RDC)
Accounts Managed by Brian Kelly Capital own (SU)
Accounts Managed by Brian Kelly Capital own (LNQ)
Accounts Managed by Brian Kelly Capital own (DIA)
Accounts Managed by Brian Kelly Capital own (GDXJ)
Accounts Managed by Brian Kelly Capital own euro futures
Accounts Managed by Brian Kelly Capital own gold futures
Accounts Managed by Brian Kelly Capital are short yen
Accounts Managed by Brian Kelly Capital own natural gas futures

For Steve Grasso
Stuart Frankel & Co and its partners own (AMD)
Stuart Frankel & Co and its partners own (AOL)
Stuart Frankel & Co and its partners own (CSCO)
Stuart Frankel & Co and its partners own (CUBA)
Stuart Frankel & Co and its partners own (GERN)
Stuart Frankel & Co and its partners own (HPQ)
Stuart Frankel & Co and its partners own (HSPO)
Stuart Frankel & Co and its partners own (MSFT)
Stuart Frankel & Co and its partners own (NYX)
Stuart Frankel & Co and its partners own (PFE)
Stuart Frankel & Co and its partners own (PRST)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners own (UAL)
Stuart Frankel & Co and its partners own (XRX)
Stuart Frankel & Co and its partners are short (QQQQ)
Stuart Frankel & Co and its partners are short (AAPL)
Stuart Frankel & Co and its partners are short (INTC)

For Mike Khouw
Cantor Fitzgerald is a Market Maker in (LYB)

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KBW expects to receive or intends to seek compensation for investment banking services from (WFC) in the next 3 months.
KBW is a Market Maker in (WFC)

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Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from (OXY.N) within the past year.
(OXY.N) has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.
(HES.N) is an Investment Banking client of DBSI
Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from (HES.N) within the past year.
(HES.N) has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.
(CVX.N) is an Investment Banking client of DBSI
Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from (CVX.N) within the past year.
(CVX.N) has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.
(XOM.N) is an Investment Banking client of DBSI
Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation (XOM.N) within the past year.
(XOM.N) has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.

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