Starbucks has struggled this year along with the majority of companies. But investors, including big money institutions, seem to think it's turning around. The Relative Strength (RS) Rating for Starbucks stock climbed to 76 Tuesday, up from 66 the day before. Add to that its B+ Accumulation/Distribution Rating and it appears the coffeehouse giant is perking up and may be a good stock watchlist candidate.
IBD's Accumulation/Distribution Rating tracks institutional buying and selling in a stock over the last 13 weeks. Updated daily, stocks are rated on an A+ to E scale. The B+ rating shows that mutual funds, ETFs and the like are fairly heavy buyers of Starbucks stock.
Starbucks Stock Nears Benchmark Rating
Decades of market research reveals that the stocks that go on to make the biggest gains tend to have an RS Rating north of 80 as they begin their largest climbs. See if Starbucks can continue to show renewed price strength and clear that threshold.
Among its other key ratings Starbucks has a weak 43 EPS Rating after reporting a drop in profits last quarter vs. a year earlier. Starbucks stock's 63 Composite Rating is better but less than ideal. On the positive side, Starbucks is in the restaurants group, which has a top-notch A+ Relative Strength Rating as formerly housebound consumers treat themselves to restaurant fare after eating home cooking for two years.
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Starbucks stock dropped to 68.39 intraday in mid-May. It starting rising from there and climbed above its 50-day line at the end of June. It crossed above the 200-day line Monday, and closed above it, at 89.07. Tuesday afternoon Starbucks stock was down about 1%, a sign of strength on a day when the market plunged. While it's not currently an ideal time to invest, see if the stock is able to establish and enter a buying range in heavy trade.
Sales Growing, Profits Lag
In terms of fundamentals, Starbucks reported a 15% year-over-year drop in earnings per share last quarter. The prior three quarters it posted EPS growth of 96% and 18%, then dropped to a 3% decline. Revenue grew 9% last quarter to $8.15 billion, following growth of 31%, 19% and 15% the prior three stanzas.
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Starbucks stock earns the No. 25 rank among its peers in the Retail-Restaurants industry group. BBQ Holdings and Restaurant Brands Inernational are among the group's highest-rated stocks.
Relative stock price strength is a good tool to help find the best stocks to buy and watch. IBD's unique Relative Strength Rating measures market leadership by using a 1 (worst) to 99 (best) score that identifies how a stock's price action over the trailing 52 weeks compares to other publicly traded companies.
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