Grab Starbucks on the Dip Before Coffee Futures Fall
The stock market has been volatile this year, with wild swings and emotional roller coasters. Starbucks, a coffee giant, is experiencing a dip in its price action, with the price of coffee bean futures rising by 3.0%. This could be a good news for those looking to buy the stock, as it could potentially meet analyst price targets of $114.5 a share.
To hedge against the rising cost of coffee beans, consider other stocks in the space, such as Chipotle Mexican Grill, which is trading at its 52-week high. Starbucks is offering a steep discount on its price action, trading at only 84.0% of its 52-week high.
To protect your capital, consider comparing Starbucks’s stock chart against the iPath Series B Bloomberg Coffee Subindex Total Return ETN, which is directly tied to the performance of coffee bean futures. If Starbucks stock drops due to a rise in the cost of coffee, your P/L would be protected by a long in the fund simultaneously. This insurance can calm your nerves if you already own the stock and are afraid of selling it only to see it rally to analyst targets.
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Source: Coffee Talk