Can Starbucks Stock Remain Unfazed by the Broad-Market Selloff?

SBUX has chart support in place to stifle any steep pullback

facebook twitter linkedin


Coffee giant Starbucks Corporation (NASDAQ:SBUX) will hold an annual shareholder meeting on Wednesday, March 17. So far, SBUX has been immune to the harsher impacts of the recent down-trending market. While the shares are off by 2.6% in 2021, their 80-day moving average has contained the damage. Longer term, SBUX is up 36.7% in the last 12 months.

SBUX Stock Chart

The equity is ripe for a shift in analyst attention. Of the 21 brokerages covering SBUX, 10 maintain tepid "hold" stances. Should investors come out of the shareholder meeting encouraged, a round of upgrades could vault the security higher.

Overall, Starbucks continues to show promising signs of growth to current and prospective investors. Prior to the COVID-19 pandemic, SBUX was increasing revenues by roughly $2 billion on an annual basis. Starbucks did take a massive hit this past year with losses of more than $3.3 billion in revenues and nearly $3 billion in net profits. However, Starbucks should be able to recover given its huge brand appeal.

One of the only real issues with Starbucks stock is found in its current valuation. SBUX currently trades at an exaggeratedly high price-earnings ratio of 184.67. However, Starbucks stock also has a forward price-earnings ratio of 37.04, which is a huge difference comparatively. Starbucks also offers a forward dividend of $1.80 and a dividend yield of 1.69%. In general, Starbucks stock should be a decent long-term investment. Any short-term weakness in SBUX stock price could be considered potential entry opportunities, especially for options traders.

That's because now also seems like an affordable time to buy SBUX options. The stock's Schaeffer's Volatility Index (SVI) of 31% sits higher than just 9% of all other readings in its annual range. This means options players are pricing in relatively low volatility expectations at the moment.

Trader: Sell These 8 Stocks in 2021

1633101108

 




 
Special Offers from Schaeffer's Trading Partners