SBUX purchases, roasts and sells high quality whole bean coffees, rich-brewed coffees, Italian-style beverages and a variety of pastries. For the 13 weeks ended 12/31/00, net sales increased 26% to $667.4M. Net income increased 41% to $49M. Revenues reflect the opening of new retail stores and higher comparable store sales due to an increased number of transactions. Net income also reflects a higher gross margin due to lower green coffee costs. SBUX purchases, roasts and sells high quality whole bean coffees, rich-brewed coffees, Italian-style beverages and a variety of pastries. For the 13 weeks ended 12/31/00, net sales increased 26% to $667.4M. Net income increased 41% to $49M. Revenues reflect the opening of new retail stores and higher comparable store sales due to an increased number of transactions. Net income also reflects a higher gross margin due to lower green coffee costs.

March 29, 2001

This ubiquitous coffee shop leader is starting to recover nicely after Mother Nature attacked its Seattle headquarters with an earthquake. The shares had been steadily dropping from the 52-week high of $51.31 for the past seven weeks. SBUX appears to have found nice double bottom support at $38.50 and could start trending higher. Now that a bottom has apparently been found, SBUX can now start its split run in earnest. The company announced a 2:1 split on March 20th and intends to make the split payable on April 27th. Another technical sign that a bottom has been reached is the fact that SBUX managed to trade back above its 200-DMA of $42.25. However, SBUX did drop back below this important moving average by the close. Still, the MACD appears to be on the verge of moving higher and may eventually trigger a buy signal. We also like the way the RSI is moving higher after signaling an oversold condition earlier this week. Therefore, new positions are suggested only if SBUX moves back above $42.25 tomorrow.

Picked on March 29th @ $41.94
Change since picked +0.00
Stop Loss $38.50

April 5, 2001

SBUX continues to struggle a bit this week as it attempts to consolidate around its 200-DMA of $42.41. In Tuesday's write-up we expressed concern about adding to positions if SBUX failed to climb back over this important moving average. Nothing has changed and we continue to stress caution until SBUX can prove that it can move higher. With that said, a sustainable advance becomes more likely as SBUX approaches its split payable date on April 27th. Traders may want to add to positions if SBUX can cross over $42.41 tomorrow on midday volume of 1.3 million shares. The MACD, which had issued a buy signal, is threatening to reverse course. This indicator would likely issue a sell signal if SBUX has a negative day tomorrow.

Picked on March 29th @ $41.94
Change since picked -1.00
Stop Loss $38.50

April 3, 2001

SBUX did a good job yesterday of maintaining its value while so many stocks collapsed. Today, a bit of a chink was evident in the armor, but the stock is, nevertheless, showing some nice relative strength. SBUX appears to have already gone through its major correction and, having found some good support at $38.56, appears to be headed in the right direction and should eventually test its 50-DMA of $46.41. That said, we are a little bit concerned that SBUX closed today below its 200-DMA of $42.69. New positions should probably be avoided until SBUX can cross back over this important moving average. We would also be concerned if SBUX drops below today's low of $41.63, which is sitting right on a short term uptrend line. Longer term, we like the fact that the MACD has just turned positive. We are also encouraged that SBUX is scheduled to pay out a 2:1 split on April 26th. Therefore, we expect a split run to occur once the overall market can stabilize and begin to bounce.

Picked on March 29th @ $41.94
Change since picked -0.19
Stop Loss $38.50

April 1, 2001

Folks don’t just want their Starbucks coffee; they need their Starbucks coffee. It seems that people can’t get enough of the stuff and are willing to pay handsomely for the gourmet blends and more exotic concoctions. Starbucks is only too happy to fill this demand. The caffeine pusher continues to expand by placing stores in everything from bookstores to grocery stores. SBUX appears to have built some nice support and is starting to rally on the heels of a split announcement. The 2:1 split will be made payable on April 27th, which is the day after earnings are to be released. This should give us plenty of time to enjoy a potential split and/or earnings anticipation run. Friday's close was just slightly above the important 200-DMA level of $42.28. New positions can be placed if SBUX can stay above this support. Another possible entry strategy would be to go long if SBUX can move above Friday's high of $43.56 on midday volume of over 1.4 million shares. A positive start to this week should cause the MACD to issue a buy signal, which would help confirm SBUX's return to a longer-term rally mode. Additionally, the OBV is starting to recover and the RSI is rising from a level that had previously indicated an oversold condition. SBUX should eventually find resistance at its 50-DMA of $46.09 but this leaves plenty of room for a 10% plus rally in the mean time. Our stops remain at $38.50 to guard against a reversal.

Picked on March 29th @ $41.94
Change since picked +0.50
Stop Loss $38.50