Today's Momo Momentum Stock To Watch: Starbucks (SBUX)

Trade-Ideas LLC identified Starbucks (SBUX) as a momo momentum candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Starbucks

(

SBUX

) 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 $547.4 million.
  • SBUX has a PE ratio of 33.
  • 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 0.5%.

'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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SBUX with the Ticky from Trade-Ideas. See the FREE profile for SBUX NOW at Trade-Ideas

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 33. 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 8.8 million shares per day over the past 30 days. Starbucks has a market cap of $82.8 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 1.91 days to cover. Shares are down 6.2% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Starbucks as a

buy

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in net income. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.0%. Since the same quarter one year prior, revenues slightly increased by 9.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • STARBUCKS CORP has improved earnings per share by 18.2% 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).
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.50 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, STARBUCKS CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • 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 16.2% when compared to the same quarter one year prior, going from $494.90 million to $575.00 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Loading ...