Starbucks Corporation: SBUX Stock Is Good for Double-Digit Upside

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Starbucks Corporation (NASDAQ:SBUX): Starbucks is the leading retailer of high-quality coffee products. It sells coffee and premium bakery goods through its more than 20,800 stores globally and other retail channels.

Among the most recent headlines concerning SBUX stock, Starbucks announced last Thursday that it will create a new, high-end band of stores called Starbucks Reserve-Only. According to management, it is in response to customers’ demand for “a higher level of product.”

In FY 2015, total revenues increased by 16.5% and are projected by Standard & Poor’s to increase by 12% in FY 2016. SBUX also plans to open 1,800 new stores, half of which will be in the China/Asia/Pacific — and that addition has analysts projecting growth in total revenues of 8% in FY 2017.

Starbucks has a good history of stock buybacks, and that is expected to continue. Meanwhile, S&P estimates EPS of $1.88 in FY 2016, up 19% from FY 2015. It also projects earnings of $2.18 in FY ’17.

Lastly, S&P has a 12-month price target on SBUX stock of $68, which would be a 20% gain from current prices (not counting returns from its modest 1.4% dividend yield).

Following last year’s August selloff, Starbucks jumped to a new high at $64 in October. Since the October hig, SBUX  stock has been trading in a wedge with triple-bottom support at $53. There is immediate support at its 50-day moving average at about $54 and a support line connecting the May to June lows at $54.40.

Since the stock is currently slightly overbought (as far as its MACD is concerned ) with mixed volume, try to buy SBUX at $56 with a trading target of $62 for a projected gain of over 10%.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/07/starbucks-corporation-sbux-is-good-for-double-digit-upside/.

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