Starbucks is officially ready to run. After 1 year and 20 days from reaching its all time high of $64.00, SBUX is ready to surge. Purchased 100 shares today at $56.40, with $0 in trading fees for a total cost basis of $5,640.00. Lets take a deeper look.
First and foremost we need to review and see if the trade was made without breaking any of the trading rules.
1) Stock has pulled back 6% from high
YES- Stock has pulled back 7% at the time of purchase
2) Stock has been downtrending for at least 8 weeks
YES - 1 year and 20 days in downtrend
3) Brand/Product/Company is noticeably 'in style' and changing our culture. NOT A FAD!
YES - Who doesn't know Starbucks. Lines are crazy and the cup is a status symbol
4) RSI is rising on the weekly
YES - RSI broke long term downtrend and continues to rise
5) MACD is crossing over on the weekly
YES - MACD crossed over 2 weeks ago
6) Breaks (and holds) downtrending channel (on the weekly) on larger than average volume
YES - Volume previous 2 weeks (MACD crossover and the followthrough) have been higher than the average
7) Increased Earnings YoY
YES - Up 24% from Q3 last year
Beyond this, what really excites me about SBUX is the global growth story. Globally, revenues are growing at 29% in China/Asia. The company also just appointed a CEO to focus specifically on China. 2,042 net new stores were opened over the past 12 months and same store sales grew by 4%. Besides China, Starbucks continues to expand all over the world. They entered their 75th country in Q4 and its 1000th store in Latin America. In Europe, I am not getting caught up in the currency issues. Every company is dealing with the strong dollar, and while this has an effect on the bottom line, the brand is still growing. If there was a dramatic slow down in sales, there would be cause for concern.
Overall, I rate this a long term buy for my portfolio.