"I've spotted an excellent opportunity to cash in on the turnaround of one of America's most visible companies -- Starbucks (NASDAQ: SBUX)," says Jim Stanton.

The quantitative analyst and contributing editor to Xcelerated Profits Report explains, "I've had my eye on a number of retail stocks for some time now, looking for signs of a potential turnaround, and Starbucks is now high on my list."

"One of the main reasons for the slide in SBUX shares from its high of $40 in November 2006 was the overly aggressive expansion plan.

"And as food and dairy prices have soared, this has led to higher operating costs. In turn, this forced Starbucks to raise prices, just as consumers were struggling from the housing slump and soaring inflation.

"And as competition from the likes of McDonalds and Dunkin Donuts has turned up the heat, Starbucks has suffered charges related to closing out unprofitable stores. But Starbucks is tackling the problems.

"Declining sales, along with its falling stock price, have hit Starbucks like a double shot of espresso at 7:00 AM. So the firm has gone back to basics, launching its revival from the top.

"Starbucks has re-hired the man responsible for the company's success – CEO Howard Schultz. Having served as CEO from 1987 to 2000, Schultz helped Starbucks grow from 100 coffee shops to 15,756 stores today.

"His knowledge and experience should help greatly in turning Starbucks around. He wants to return to the company's roots: the coffee, the consumer, and the Starbucks experience. More specifically, Schultz plans to reform Starbucks in the following ways:

• Downsize America: Starbucks plans to reduce the number of new U.S. locations between 2009 and 2011 to less than 400 new stores per year, while also closing underperforming stores.
• Supersize Overseas: The company plans to accelerate international expansion, targeting 1,050 new store openings in 2009, 1,150 in 2010 and 1,300 in 2011. Starbucks says its international presence will grow from 30% to over 40%, boosting its total store count to 21,500 by the end of fiscal 2011.
• Protein & Power: Starbucks aims to boost traffic with new, high-protein, low-calorie products – part of a broader push into healthier drink and food offerings.
• Wi-Fi: Starbucks recently installed free Wi-Fi access in stores to attract a bigger business and student crowd.

"I like what I hear about Starbucks' transformation, but in the current environment, the key to boosting business is pricing. People are willing to pay for the 'Starbucks Experience' as long as the price is within reason.

"Schultz's strategy of soft-pedaling growth in mature markets, while investing more heavily overseas reminds me of the McDonald's plan in the early 2000s. It worked, too. Its share price has more than quadrupled since 2003.

"And Schultz's return has attracted some much bigger customers, too. Respected investors Nelson Peltz (Trian Fund Management) and value investor Lee Ainslie (Maverick Capital) have recently added SBUX to their portfolios. Peltz is an activist investor and has taken a stake of just over 1% – excellent news for shareholders.

"Typically, he pressures companies to focus on their core businesses and dump less profitable ventures. He will reinforce Starbucks' raison d'etre: A coffee house. Do coffee – and do it well – and people will return.

"The return of Schultz and his rebuilding plan, along with investments by Peltz and Ainslie, has had a positive effect on SBUX shares over the last month.

"Down from its November 2006 all-time high of $40, a definitive close above $18.52 would now indicate a positive change in trend."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.