We recommended this stock in July after it gapped higher on massive volume off earnings. We were, and remain, not enamored of its declining sales, but the company has closed underperforming stores. Price gained over 20% from our entry point.
The stock has formed what O’Neil calls a Square Box. Last week it dipped under the 50 MA but gapped back above it, breaking out to new 52 week highs on earnings. Price traded in a tight range Monday on sharply reduced volume, a sign gains were being bullishly consolidated prior to another move higher.
We believe this is an ideal entry point for the stock and favor it because it is a large cap, which have been outperformers of late, and is in an area of great interest to investors (coffee).
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