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Christian Tharp, CMT

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Five Star Stock Watch: Starbucks

Almost everyone loves Starbucks, and its not even about just the coffee anymore; the company serves up sandwiches, salads, pastries and even music. Maybe that's why the stock did so well in 2013?

Can the trend continue? The stock seems to be running out of gas over the past couple of months, but a quick analysis of Starbucks below might point traders in the right direction.

The company: Starbucks 

Ticker Symbol: (NASDAQ: SBUX)

Sector: Services   

Industry: Specialty Eateries

Starbucks Corporation operates as a roaster, marketer and retailer of specialty coffee worldwide. Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single serve products, and juices and bottled water. 

 

Related: Five Star Stock Watch: Tesla

 

The company’s stores also provide fresh food offerings; ready-to-drink beverages; and various food products, including pastries, and breakfast sandwiches and lunch items, as well as beverage-making equipment and accessories.

 

Please take a look at the 1-year chart of Starbucks below with added notations:

As mentioned above, Starbucks had a very good year in 2013. However, the trend seemed to stall in December and the stock has pulled back. Starbucks has also created a trendline of resistance during its two month decline.

Last week the stock approached what appears to be a key level of support at $75. So, a hold and push through trendline resistance should mean higher prices for the stock, while a break of $75 could spell trouble.

Related: Five Star Stock Watch: JC Penney

Starbucks is set to release earnings on January 23, 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Tags: Five Star Stock Watch

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