Skip to main content

Can Starbucks Stock Shake Off a Recession?

Starbucks stock continues to show strong price action and trend higher. Can it fight through a recession, too?

Starbucks  (SBUX) - Get Free Report has been one of the better-performing stocks out there lately.

The coffee-bar giant's shares are about 0.5% higher at last check, which is notably better than the roughly 0.7% loss in the S&P 500.

The stock is now working on its fourth monthly rally in the past five months, with the lone down month in that stretch a 2.9% loss in December. Overall, the shares are up more than 24% in that stretch.

Further, Starbucks stock is up more than 50% from its 52-week low of $68.39 in May and has rallied in five of the past eight months.

That’s pretty good for a bear market, but when we consider Starbucks hasn’t had a monthly loss of more than 3% since then -- a 2.9% loss last month, a 0.8% loss in August and a 2.7% loss in June -- it’s even more reassuring for the bulls.

And it's got investors wondering if Starbucks stock is one to own into and through a recession.

Buy or Sell Starbucks Stock?

Daily chart of Starbucks stock.

Daily chart of Starbucks stock.

On the one hand, Starbucks stock seems like a sell in the event of a true recession. As consumer spending comes down, Starbucks would likely generate less revenue.

But while many economists expect a recession this year, the labor market hasn't been significantly hit as unemployment remains near historical lows. That bodes well for current spending power, even as inflation kneecaps consumers’ disposable income.

Starbucks is an affordable luxury. So while some consumers may not be able to afford a full-blown vacation, they can enjoy a Frappuccino once or twice a week.

With forecasts calling for double-digit annual revenue growth for several years, that seems to be the consensus among analysts as well.

On the charts Starbucks stock has been enjoying a very strong trend and recently found support from the 10-week moving average. Now that it's trying to rotate through the 61.8% retracement, let’s see if the stock can clear last quarter’s high at $105.54.

If it can do so, it opens the door to the 78.6% retracement near $114, then the $116 to $117 zone, which was stiff resistance in fourth-quarter 2021. Over $120 puts the high back in play near $126.

On the downside, be wary of a move below $100. If Starbucks stock loses the 10-day moving average as support and breaks below the December low near $96, $92.50 could be back in play.