Starbucks (SBUX) Highlighted As Momo Momentum Stock
Trade-Ideas LLC identified
(
) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Starbucks as such a stock due to the following factors:
- SBUX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $697.6 million.
- SBUX has a PE ratio of 34.
- SBUX is currently in the upper 30% of its 1-year range.
- SBUX is in the upper 25% of its 20-day range.
- SBUX is in the upper 35% of its 5-day range.
- SBUX is currently trading above yesterday's high.
- SBUX has experienced a gap between today's open and yesterday's close of 1.1%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.
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More details on SBUX:
Starbucks Corporation operates as a roaster, marketer, and retailer of specialty coffee worldwide. The company operates in four segments: Americas; Europe, Middle East, and Africa; China/Asia Pacific; and Channel Development. The stock currently has a dividend yield of 1.4%. SBUX has a PE ratio of 34. Currently there are 13 analysts that rate Starbucks a buy, no analysts rate it a sell, and 5 rate it a hold.
The average volume for Starbucks has been 8.7 million shares per day over the past 30 days. Starbucks has a market cap of $84.4 billion and is part of the services sector and leisure industry. The stock has a beta of 0.74 and a short float of 1.3% with 1.24 days to cover. Shares are down 3.5% year-to-date as of the close of trading on Friday.
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Analysis:
rates Starbucks as a
. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, solid stock price performance and increase in net income. We feel its strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- STARBUCKS CORP has improved earnings per share by 24.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, STARBUCKS CORP increased its bottom line by earning $1.82 versus $1.36 in the prior year. This year, the market expects an improvement in earnings ($1.89 versus $1.82).
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Hotels, Restaurants & Leisure industry average, but is greater than that of the S&P 500. The net income increased by 20.4% when compared to the same quarter one year prior, going from $626.60 million to $754.20 million.
- After a year of stock price fluctuations, the net result is that SBUX's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The gross profit margin for STARBUCKS CORP is currently lower than what is desirable, coming in at 28.84%. Regardless of SBUX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.39% trails the industry average.
- You can view the full Starbucks Ratings Report.
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