Starbucks Corp. is a roaster, marketer, and retailer of specialty coffee with operations in 83 countries. It has over 36 000 company-operated and licensed stores serving customers worldwide. The company's operating stores offer coffee drinks and food items, as well as roasted beans, coffee accessories, and teas. Starbucks also sells goods and services under Teavana, Evolution Fresh, Ethos, Starbucks Reserve and Princi.
Fundamentally, Starbucks remains a formidable player in the coffee-beverage space, with a dominant market position as the world's number one specialty coffee retailer. The group's Reinvention Plan, which involves investment into international expansion, technology advancement and its Starbucks Rewards loyalty programme, is expected to continue providing uplift to its portfolio's performance.
Technically, the price is developing a symmetrical triangle pattern (see the black converging trendlines on the main chart as well as the insert). If the price breaks out of the triangle pattern above the upper trendline, it is considered a bullish signal. The symmetrical triangle pattern is forming during an uptrend, which is often interpreted as a consolidation before the price continues to increase.
The stock is trading above its 200-day simple moving average (SMA) of ~$100. This can be considered a long-term uptrend or bullish phase.
Our bullish bias is supported by fading downside price momentum, as indicated by the Moving Average Convergence Divergence (MACD) histogram, as well as the sideways trajectory of the On-balance Volume (OBV) indicator.
Share Information
| Share code | SBUX |
|---|---|
| Industry | Consumer Services |
| Market Capital (USD) | 117.99 billion |
| One year total return | 30.92% |
| Return year-to-date | 4.79% |
| Current price (USD) | 102.92 |
| 52 week high (USD) | 115.48 |
| 52 week low (USD) | 80.00 |
| Financial year end | October |
| Closing paragraph | The share price has performed well over the last year, with a modest YTD performance. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 2.96 | 3.42 | 4.09 | 4.79 |
| Growth (%) | 15.54 | 19.53 | 17.07 | |
| Dividend Per Share (USD) | 1.96 | 2.14 | 2.33 | 2.53 |
| Growth (%) | 9.08 | 8.89 | 8.59 | |
| Forward PE (times) | 30.09 | 25.18 | 21.50 | |
| Forward Dividend Yield (%) | 2.08 | 2.26 | 2.46 | |
| Closing paragraph | Earnings are expected to increase in the double digits medium-term as the company continues to implement is Reinvention Plan. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
JBHT - Take Profit (Close the position) |
FCX - Buy (Continue to hold) |
HD - Take Profit (Close the position) |
|---|---|---|---|
| Entry | 301.09 | 178.77 | 39.71 |
| Current | 199.76 | 43.69 | 325.13 |
| Movement | 11.7% | 10.0% | 8.0% |
| Summary text | We closed the trade early to lock in profit and reduce portfolio risk. |
Price action reflecting symmetry is of interest. The stock is trading above its 200-day simple moving average. Upside momentum provides further support.
Our profit target is $47 with a trailing stop-loss at $40.50. Exit the position around 18 October 2023. |
We closed the trade early to lock in profit and reduce portfolio risk. |
| Share Name and position |
HACK - Take Profit (Close the position) |
HIG - Buy (Continue to hold) |
FOXF - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 47.58 | 70.60 | 105.69 |
| Current | 51.26 | 74.51 | 110.27 |
| Movement | 7.7% | 5.5% | 4.3% |
| Summary text | That trade is approaching a time exit. We closed the trade early due to declining technical support. |
The stock is displaying an incomplete rising wedge pattern, which is attractive. The price crossed above its 200-day simple moving average. Upside momentum continues to support the bullish trend
Our profit target is $78 with a trailing stop-loss of $71. Exit the position around 27 September 2023. |
Price action depicting higher highs and higher lows remains attractive. The stock is trading above is 200-day and -weekly simple moving averages. Upside momentum provides further support.
Our profit target is $126 with a trailing stop-loss of $102. Exit the position around 6 October 2023. |
