Does Starbucks Support Rising Prices?

With shares of Starbucks (NASDAQ:SBUX) trading around $76, is SBUX an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Starbucks is a roaster, marketer, and retailer of coffee operating worldwide. The company purchases and roasts the coffees it sells along with handcrafted tea and other beverages, and a variety of fresh food items through its stores. Starbucks sells a variety of coffee and tea products and licenses its trademarks through other channels such as stores and national food service accounts. In addition to its flagship Starbucks brand, the company’s portfolio features Tazo Tea, Seattle’s Best Coffee, Starbucks VIA Ready Brew, Starbucks Refreshers beverages, and the Verismo System by Starbucks. Starbucks has developed a solid reputation over the apst several years, which has generated a lot of buzz for its products.

Starbucks is ready to give back to Colombia, the country that has supplied its famous coffee beans for more than 40 years. According to Reuters, Starbucks recently officially announced it would finally be opening its first cafe in the country in 2014, and it expects 50 other coffee shops to follow suit within the next five years, starting in the capital, Bogota, and spreading outward. The cafes will be facilitated through a joint venture between Alsea, a Mexican restaurant firm that already operates more than 500 Starbucks stores in Latin America, and Colcafe, a subsidiary of the fourth-largest Colombia food company.

T = Technicals on the Stock Chart Are Strong

Starbucks stock has been surging higher over the past several years. The stock is currently trading at all-time high prices and looks poised to continue higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Starbucks is trading above its rising key averages, which signals neutral to bullish price action in the near term.


Source: Thinkorswim