SBUX, a Strong Buy or WM Clone?
Starbucks SBUX stock popped up in price Tuesday after the company announced its new CEO taking over, jumping from $18.38 all the way up to $19.86 and even touched $21 intraday. Now the stock has filled part of its gap range, and looks to be a good buy for the long haul. Is this a false assumption?
The flip side to this gap and heavy institutional support is the fact that Washington Mutual, WM stock did the same gap up playon November 30th. What looked to be a bottom ended up just delaying the inevitable, the stock closed that day at $19.50 and now today trades around $12.
First check out this chart of SBUX,
SBUX Chart, Click to ViewNotice the gap and how the stock has filled it over the last two days. If you were a bull and this was the bottom you’d be buying right now. But look at this chart of WM,
WM Stock, Click to ViewAre you willing to take the risk with SBUX knowing what could be coming around the corner?
The best answer to this question is to just be patient and not do anything. If SBUX stock can climb back up and clear Tuesday’s highs then the probability of a bottom is greatly increased. If the $18 lows are broken then SBUX stock should continue its downward spiral and be a good short candidate.
no matter what i will never ever recommend sbux.. just one of those stocks that is on my black list.. hurts too much to talk about it
bad experience huh?
I think there comes a point where SBUX is cheap on a valuation basis, and if we aren’t there quite yet, we are very close. To think that the company will stop growing is being naive and demand for their products is clearly still there.