Do relentless trade war and interest rate talk, as well as tied-at-the-hip price swings have your head spinning? If so, it may be time to leave the headlines at the door and nibble on the durable price charts in food stocks like Chipotle (NYSE:CMG), Shake Shack (NYSE:SHAK) and Grubhub (NYSE:GRUB).
From rate cut optimism to gloomy “not so fast” worries regarding FOMC policy or even off-the-cuff tweets from POTUS, it’s hard not to be concerned about the risks of owning stocks inexorably linked to the uncertain macro political and economic environment. Then there’s food stocks CMG, GRUB and SHAK stock.
Regardless of a trade war, recession or what have you, people have to eat. And for people who are on the go and demand quality over quantity, fresh food offerings from Chipotle and classic grilled American fare from Shake Shack fit the bill. Also, within our busy lives, having food delivered straight to our doorsteps or workplaces courtesy of Grubhub is another “necessity” for many of us.
With all of that in mind, let’s take a deeper dive into each of these food stocks to determine why they’re ideal buys right now.
Chipotle shares have stormed higher over the past year and a half following a nauseating run of health scares that crashed CMG stock into a deep correction shortly after it notched all-time-highs in late 2015.
CMG shares recently broke out of a healthy looking monthly handle consolidation. Now this food stock is attempting to make good on a breakout of its corrective cup-shaped base.
CMG Stock Strategy
With the monthly stochastics in overbought territory but flirting with a bullish crossover, CMG stock is a buy today in anticipation of continued price momentum. I’m setting a price target of $1,000 on a rally out of the cup base. To protect against any pattern weakness and downside exposure, setting a stop-loss beneath the handle low at $634 looks like a good policy off and on the price chart.
Shake Shack (SHAK)
Similar to Chipotle, SHAK stock has put together a monthly cup-shaped corrective base. But unlike CMG, Shake Shack’s pattern is just breaking out above 62% Fibonacci resistance associated with its 2015 all-time-high to an all-time-low set in 2017.
Given the depth of the correction, clearing of key resistance and bullishly trending monthly stochastics, a challenge of this food stock’s high and the $100 level in 2019’s second half looks compelling.
SHAK Stock Strategy
Buy shares of SHAK today. I’d recommend a blended stop below $64 and peeling off upside exposure as this food stock moves toward $95 – $100.
Unlike the other food stocks I’ve suggested that you might buy, GRUB stock is just now coming out of a deep correction. With a successful test of the 62% support level and stochastics turning higher from an oversold condition, I’m of the mind this is the beginning of yet another constructive, not destructive base in the making.
GRUB Stock Strategy
The monthly chart highlights GRUB’s May doji candlestick, which was confirmed as a pivot low last month. With shares only a couple percent above the ideal purchase price of $73.59, this food stock is in a buyable position right now.
For containing exposure, I’d set a blended technical and dollar-based stop below $64.25 and size the position accordingly. Likewise, if GRUB stock goes more or less according to plan, taking partial profits in-between $100 – $105 looks appropriate.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.