This coffee retail leader has operations in 78 countries but plans to expand more aggressively in China to spur earnings and help fund $20 billion in share buybacks and dividend increases over the next couple years.

The presence of an activist investor—with a track record of improving operations and cash flow—also bolsters the stock’s appeal.

STARBUCKS CORP. (Nasdaq symbol SBUX; www.starbucks.com) is a leading roaster and seller of specialty coffee.

As of September 30, 2018, it had 15,341 company-operated stores and 13,983 franchised locations. That makes for a total of 29,324 outlets spread across 78 countries.

In the past year, Starbucks has slowed the opening of new U.S. stores to focus on other ways of expanding sales. Those include offering home delivery and making it easier for customers to order drinks with their mobile devices.

Meantime, despite signs of slowing growth in China, Starbucks plans to expand in that country. It aims to operate 6,000 stores in 230 cities, up from its current 3,600 outlets in 150 cities. For each new location in China, the company recoups its initial investment on average in less than 1.5 years compared to 2 years for each new U.S. store.

Starbucks has also completed its new licensing deal with Swiss food giant Nestlé S.A. recently.

Under the terms of the agreement, Nestle acquired the exclusive worldwide rights to sell Starbucks-branded coffees and teas in supermarkets and other food retailers.

In exchange, the company received $7.15 billion. That cash will help fund its plan to return $20 billion to shareholders through share buybacks and dividends over the next two years. That’s equal to 28% of its $71.6 billion market cap.

As a result, for the fiscal year ending September 30, 2019, Starbucks expects its earnings per share before unusual items will improve 8% to 10%, to between $2.61 and $2.66. The stock trades at 25.0 times the midpoint of that range. The $1.44 dividend yields 2.2%.

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Activist investor Bill Ackman recently revealed that his Pershing Square hedge fund had made a $900 million investment in Starbucks. It now owns about 1.1% of the outstanding shares.

Unlike other restaurant firms that Ackman has targeted, Starbucks has no separate chains to spin off or real estate to sell. As well, selling outlets to franchisees would reduce the parent company’s share of highly profitable stores. As a result, Ackman will likely push Starbucks to keep improving the performance of its existing operations. That would free up cash for more share buybacks and dividends.

Recommendation in Wall Street Stock Forecaster: Starbucks is a buy.