Mail Call

I received a very nice note yesterday. The writer shall remain anonymous (because I did not request his or her permission before sharing here). It says, simply:

"So glad to see you're back to your old (and profitable) tricks. Visit the oil complex when you find yourself bored."

Heck, anyone :-) can notice a trend in motion, which after all requires only three data points. (I require only two.) But the ability to recognize a change in direction... ahh, now there's the rub.

Which is why I choose to elucidate opportunities such as Starbucks/SBUX. The more familiar you become with this part of a pattern the less risk you will embrace in the future. And as I share other trend reversal moments (up to down, etc) the less risk your portfolio need assume. Less risk might mean more reward -- it has been known that stocks can continue to decline in price -- but it does mean less worrying.

BTW, having mentioned Starbucks/SBUX... the company reported after the close today its February comps of +9.0 %, vs consensus estimates of +6.7%. Analysts are positive on Starbucks/SBUX following this news release, with BofA Sec noting that, while these results are not quite at the double-digit mark seen throughout 2004, they still are above the high end of management's long-term forecast of 3-7%, and ahead of the analyst's expectations for 7%. BofA Sec expects the stock to rebound moderately, but would look for an opportunity to revisit their view on the shares in the coming months if continued single digit comps cause weakness in the stock. Investors should expect same-store sales to remain in the upper-single-digit range for 2005. Maintains its "Neutral" rating... UBS notes the solid Feb SSS should turn investor focus back towards SBUX's unique EPS growth profile and away from the multiple compression risk that could come from a deceleration in traffic growth. In their view, SBUX could grow eps by 25% per year -- less than the 28% CAGR over the last 4 years but well above the 20% L-T eps growth Wall Street forecast. Maintains its "Buy" rating.

The shares, which already had closed at $52.81 (+23¢) screamed higher in after hours trading, with the most recent trade at $54.50 (+$1.69). Do not forget, however, about the previously mentioned resistance at ~$55... To parody the Miller Lite commercial: less risk, more reward.