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 $456.6 million.
  • SBUX has a PE ratio of 37.
  • 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 0.8%.

'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 1.3%. SBUX has a PE ratio of 37. Currently there are 18 analysts that rate Starbucks a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Starbucks has been 11.2 million shares per day over the past 30 days. Starbucks has a market cap of $87.1 billion and is part of the services sector and leisure industry. Shares are down 0.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Starbucks as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • SBUX's revenue growth has slightly outpaced the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 11.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,636.00 million or 14.79% when compared to the same quarter last year. In addition, STARBUCKS CORP has also modestly surpassed the industry average cash flow growth rate of 14.73%.
  • The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
  • STARBUCKS CORP's earnings per share declined by 29.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.

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