Starbucks Headlines These 5 Top Watch-List Stocks

Five restaurant standouts are your stocks to watch this week: Starbucks (SBUX), Wingstop (WING), Chipotle Mexican Grill (CMG), Yum Brands (YUM) and McDonald’s (MCD). Starbucks stock and McDonald’s stock are members of IBD’s Leaderboard, while Wingstop stock is on the IBD 50 list of top growth stocks.

Stocks To Watch In Restaurant Group

Starbucks stock leads the group with an IBD Composite Rating of 97 out of 99, while McDonald’s stock and Wingstop stock each earn a 91 CR. Chipotle stock has an 86 CR while Yum stock has an 80 CR.

Looking at the Composite Rating is a quick way to filter for high-quality growth stocks, since it measures stocks on key fundamental and technical metrics. It’s important to focus on watch-list stocks that are not only setting up in proper base patterns, but also have top-notch earnings and sales growth, profit margins and relative price strength.

Starbucks Stock

Starbucks stock is trading 5.4% below a 69.08 buy point from a newly formed flat base in a base-on-base pattern. Shares are extended about 5% from their last breakout above a 62.04 entry.

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Starbucks stock sold off intraday Friday after saying it now sees long-term earnings growth of 10%, down from the company’s previous estimate of 12%. But Starbucks stock then rebounded from the 10-week line, which could be a potential entry for aggressive investors.

Wingstop Stock

Wingstop stock is consolidating, with a potential buy point at 72.11. Shares are trading right around the 50-day line and have had a hard time holding above that level throughout the base. Wingstop stock is trading 12% below the potential buy point.

The relative strength line for Wingstop stock is off highs, but it’s been trending higher in December. The RS line measures price performance vs. the S&P 500 index, so the uptick signals near-term strength amid broader weakness.

Chipotle Stock

Chipotle stock is trading 8.6% below a 501.08 buy point from a cup-with-handle base. Shares finished Friday below the 50-day line for the first time since the end of October. That could now be a potential resistance level for Chipotle stock.

While many of its restaurant peers are expected to see earnings growth slow down in 2018, Chipotle stock is expected to see EPS growth of 40% in 2019, up from 29% in 2018.

Yum Stock

The parent of Taco Bell, KFC and Pizza Hut is just 0.7% below a buy point after falling 1.9% to 91.70 on Friday. Yum stock first cleared the 92.31 entry several weeks ago. Then it dipped below buy range and found support at the 50-day as it rebounded higher. Yum stock never triggered a sell signal.

McDonald’s Stock

McDonald’s stock is extended 6.5% above a 172.10 buy point from a saucer-with-handle base. Even though shares are 4% below their Nov. 29 all-time high of 190.88, the relative strength line is at new high ground. When the RS line is at a new high before the stock hits a new price high, that’s especially bullish.

Stocks To Watch, Not Buy

Stock market conditions are volatile and weak, with the Dow Jones and S&P 500 index ending Friday at their lowest closes in months. It’s not a good time to be buying stocks. The vast majority of stocks move in the same direction as the overall market. Even top growth stocks have a hard time holding up when the market is under pressure or in a correction.

Wait for the stock market to signal real momentum before buying. Having a watch list that’s regularly updated will ensure you’re ready to get back in when the time is right.

Looking at lists like Leaderboard, which includes Starbucks stock and McDonald’s stock, and the IBD 50, which includes Wingstop stock, are great places to start when building your list of stocks to watch.

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The post Starbucks Headlines These 5 Top Watch-List Stocks appeared first on Investor's Business Daily.

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