U.S. markets struggled for direction again today, opening higher on news that the Chinese yuan had stabilized overnight, then sinking below yesterday’s closing numbers, only to regain their footing in the late afternoon.
The culprit was once again the crude oil market, which intraday fell below $30 a barrel for the first time in more than 10 years, and settled at $30.51, down 3%. But the fact that it stabilized after dropping below $30 actually helped stocks to finish higher.
The Dow Jones Industrial Average finished up 0.7% and the S&P 500 finished 0.8% higher. The Nasdaq was ahead by 1%. Among sectors, healthcare and technology were the strongest, while basic materials and utilities were today’s losers.
But several consumer stocks looked tough today. Starbucks Corporation (NASDAQ:SBUX), Lululemon Athletica inc. (NASDAQ:LULU) and Burlington Stores Inc (NYSE:BURL) all shone brightly and are three of today’s best stocks. Guidance and expansion plans set the stage:
Starbucks Corporation (SBUX)
Starbucks was up modestly today after announcing that over the next five years, they will open 500 new storefronts in China each and every year.
Despite the recent turmoil in China, CEO Howard Schultz told the Wall Street Journal that he is still bullish on that country and that China will eventually become SBUX’s largest market. SBUX already has 2,000 stores in operation throughout China.
Starbucks also says it will launch seven new “wellness” teas as part of the Teavana brand they acquired over three years ago. The teas will be sold in 350 Teavana stores and on the Teavana website.
After rising some 77% from early 2014 to November 2015, SBUX stock recently pulled back close to its 200-day moving average at $55.68. But the stock has now held support and bounced higher. SBUX stock rose nearly 3% on the day.
Lululemon Athletica inc. (LULU)
LULU stock was a big winner today after raising guidance on the fiscal fourth quarter, in a complete and stunning reversal of their own negative outlook last month.
So what happened? Well, apparently the athletic wear retailer had a much better holiday season than what they originally expected. LULU now says they will earn 78 to 80 cents per share for this quarter, which ends on the last day of January. Their previous guidance was in a range of 75 to 78 cents. LULU also raised revenue guidance from a range of $670 million to $685 million, to a new forecast for $690 million to $695 million.
LULU was up nearly 4%, as the stock rose back across the 200-day moving average for the first time since early September.
Burlington Stores Inc (BURL)
Burlington also got a surprising 14% lift today after updating their guidance last night. What was so surprising was that previous guidance was either as good or better than the update. Perhaps Wall Street was expecting worse numbers and sent prices higher in relief. It may also be because the stock has recently been beaten down from $56 to $41.
At any rate, previous EPS guidance for fiscal 2015 fourth quarter had been $1.44 to $1.48. The new guidance is now $1.44 to $1.46. Analysts were looking for a range of $1.48 to $1.55.
BURL also said net sales will increase 3.7%, whereas previously they estimated a range from 3.7% to 4.7%.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
