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It's no surprise that the most popular stores among Americans -- according to data compiled by consumer habits surveyor Placed -- are those you likely pass at least once on your daily commute. On my way home from the office, I drive past one Wal-Mart Stores, Inc. (NYSE:WMT) location (ranked No. 1 on the list), two McDonald's Corporation (NYSE:MCD) restaurants (ranked No. 2), and a pair of Walgreen Company (NYSE:WAG) stores (ranked No. 5).
Against this backdrop, we decided to examine the technical and sentiment set-ups of the eight publicly traded companies on the Top 10 list, to see if there are any potential contrarian opportunities. After weighing the stocks' charts against a number of telltale sentiment signs, we found one contrarian standout: Starbucks Corporation (NASDAQ:SBUX), which comes in at No. 4.
On the charts, SBUX has declined more than 11% so far in 2014, and is currently off 1.4% today at $69.69. Since peaking at a record $82.50 in November, the shares have backpedaled 15.5% beneath their 10-week and 20-week moving averages. More recently, the stock has underperformed the broader S&P 500 Index (SPX) by close to 9 percentage points during the past three months.
Nevertheless, SBUX remains beloved among analysts. In fact, 17 out of 23 brokerage firms maintain "buy" or better endorsements, with not a single "sell" to be found. In addition, the consensus 12-month price target of $87.83 stands in uncharted territory for the equity, and represents a premium of 26% to SBUX's current price. A round of downgrades and/or price-target cuts could exacerbate selling pressure on the coffee concern.
Over on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have purchased to open 1.8 SBUX calls for every put during the past two weeks. The resulting 10-day call/put volume ratio of 1.80 stands higher than 74% of all other readings from the past year, pointing to a healthier-than-usual appetite for bullish bets among options buyers of late.
As such, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.87 indicates that calls outnumber puts among options expiring within three months. Even more telling, this ratio registers in the 31st percentile of its annual range. In other words, short-term speculators are more call-heavy than usual right now. A reversal in sentiment in the options pits could also translate into technical headwinds for Starbucks Corporation (NASDAQ:SBUX).