Of course, there's a good chance the company will earn solid returns once it enters a more mature phase and the costs of expansion become less burdensome. That's exactly what the market expected of Starbucks until recently: Its shares outperformed the S&P 500 every year between 1993 and 1998, compounding at an annual rate of 35% over that time span.
But an aggressive-growth stock can get hammered if it doesn't meet lofty expectations. That's what happened to Starbucks in mid-1999, when the company announced that its growth would be slowing and that it would start concentrating more on the Internet rather than on selling coffee. Its stock tanked and finished the year down 14%.
How Expensive Is It? >>