Finding the Next Starbucks: How to Identify and Invest in the Hot Stocks of Tomorrow

by Michael Moe

“The stocks that generate the most spectacular return are small companies that become big companies. My objective is to identify and invest in what I call the stars of tomorrow—the fastest growing, most innovative companies in the world.”

Michael Moe was one of the first research analysts to identify Starbucks as a huge opportunity following its IPO in 1992, when its market cap was $220 million. Today, its market cap is $23 billion. Lucky? Maybe a little. Art or science? Both. For more than fifteen years Moe has made great calls on many other stocks, earning a reputation as one of today’s most insightful market experts.

Now, in his first book, Moe shows how winners like Dell, eBay, and Home Depot could have been spotted in their start-up phase and how you can find Wall Street’s future giants. He forecasts the areas with the greatest potential for growth, including peer-to- peer networking, nanotechnology, and alternative energy. And he explains his four Ps of future superstars: great people, leading product, huge potential, and predictability.

Ironically, while the opportunities for outsized returns for investors lie in identifying early-stage growth companies, large investment banks are driven by the economics of trading volume and therefore generally ignore the stars of tomorrow. If you are looking to invest in tomorrow’s winners it’s unlikely you will find them by reading Wall Street research. Mainly, Wall Street is focused on reporting on companies everybody already knows about.

Coincidentally, to identify and invest in tomorrow’s stars, you are unlikely to be battling Wall Street’s finest—they aren’t there.

Throughout the book Moe includes interviews with some of the biggest names in business—from Howard Schultz and Bill Campbell to Vinod Khosla and Michael Milken—who reveal their own insights into how they discover the stars of tomorrow. For Wall Street insiders and individual investors alike, Finding the Next Starbucks is an indispensable guide to spotting growth opportunities.

Genres: Finance, Business, Money, Collections

384 pages, Hardcover

First published January 1, 2006

Reviews

[Patrick · Rating 4 out of 5]

Investing is a difficult game. Who can correctly identify which company stocks will explode and which will tumble? Well, Michael Moe has the answer, or so he claims. Moe invested in Starbucks during its early stages, hence the name Finding the Next Starbucks. In this book, he explains what he thinks are indicators of companies becoming the next big thing.

There's a lot of information packed into this book and it seems almost impossible to digest it all after merely one read. Moe includes a few simple concepts such as the Four P's (people, product, potential, and predictability) and megatrends (significant changes that affect business, economy, and society). Each chapter is broken down into smaller subsections and accompanied by plenty of numbers and charts. It's clear that Moe knows what he's talking about. His career goes far beyond this book as a quick Google search will show that he's also invested in Snapchat and Lyft.

He also emphasizes looking at future trends. Nanotechnology, alternative energy, and demographic changes are all key areas that will indicate which companies will be successful. For example, investing in a marijuana company last month (December 2016) would've been an incredible idea since all their stocks jumped up once the sweet leaf was legalized in California.

Putting all the information and angles together seems like a difficult process, but Moe attempts to show the reader how it's done near the end. He compares two different companies in the same sector (Starbucks vs. Krispy Kreme, eBay vs. Sotheby's, Intel vs. AMD, etc.) to show how his methods can pick clear winners. After reading through the section, I'm still rather unclear on how to apply his processes.

It's also important to note that Finding the Next Starbucks probably isn't the best starting point for new investors. It's riddled with terms like P/E/G and CAGR. There's a handy glossary at the end of the book to make things easier, but it's not exactly Investing 101. It's quite a useful book, but it's merely a stepping stone for those wishing to break into stock trading.

[Kim · Rating 1 out of 5]

i thought this would be like "the tipping point" from a company perspective. instead it was full of mathematical calculations and totally unfun. i didn't even finish it.

[James Jr. · Rating 4 out of 5]

Wouldn't it be great if we could find the next Starbucks or the next Amazon before they become the success that they are today. Just imagine, a $10,000 investment into these companies in the early years would have made you very rich! Well, Moe go into great detail of what to look for in companies that display the traits of being great and obtaining major success. This book of filled with a lot of good information. I'm planning on a reread at a later date.

[Ridzwan · Rating 3 out of 5]

Much has been written about “economic moats” and how the astute investor should always look out for one when making the decision to invest in a particular company. Some have chosen to identify this moat purely via technical analysis while others are bent on doing it via the fundamentals.

Author Michael Moe gives a different perspective on the economic moat through a concept he calls the 4 “P”. Choosing a good company to park you money in is a delicate balance of good people, product, predictability and profits. A much more thorough dissertation of this theory is covered amply in the book, complete with real-life example of actual stocks.

Not bad for a beginner investor but I would imagine the hard core technical analysts to frown over the highly fundamental orientation of the book. Nonetheless, it makes for a very enjoyable read.

[Sheila]

The message of this book is to find company that made profit for, you may say, 10-years-term. I do kinda agree with this opinion although sometimes you may misjudge financial statement due to different accounting rules, but somehow, company that can make profit for long term usually earn gain in its stock price.

[David Glad · Rating 2 out of 5]

I thought some details seemed incorrect, most glaring the market capitalization (share price times total shares) expansion as it failed to consider dilution of stock options on the massive increases in some companies' valuations.

[Tom · Rating 2 out of 5]

Formula for success based on 20/20 hindsight. A fatal error.

[Diegoz910 · Rating 4 out of 5]

Is getting better.
Entrepreneurship.
Good point of view about new companies and the best examples of majestic boomers.

[Tommy Lee · Rating 4 out of 5]

great ideas to be taken from this book on growth investing

[S]

332.6322 MOE