Starbucks (SBUX) and Chipotle (CMG) will top this morning’s trading action. Hoping to revive business growth, Starbucks hired Chipotle’s CEO, Brian Niccol. SBUX stock jumped by 23% in response, a winning rally that might prove short-lived.
In addition to SBUX stock underperforming before the news, Dutch Bros. (BROS) and Krispy Kreme (DNUT) also struggled. Consumers do not believe the official government CPI (inflation) reports. They are experiencing cost pressures and are choosing to avoid Starbucks.
Although CMG is yesterday’s losing stock, down by 7.5%, customers are willing to spend generously at its restaurants.
SBUX stock trades at a 26.88 price-to-earnings ratio. CMG stock trades at 50.6 times earnings.
In the luxury goods market, Estee Lauder (EL) is a long-term losing stock. Although it gained 6.64% on Tuesday, business is slowing down. Its rich clientele in China are struggling from an economic downturn. Traders may consider taking profits in EL stock.
In the biotech sector, Illumina (ILMN) risks falling back from its $125 peak. The firm hosted a strategy update special call after markets closed yesterday. The firm expects its business to grow in the double-digit to teen percentage. Profits will expand as it achieves continuous improvements. It will increase operating margins despite not having revenue growth.
