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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (28324)3/10/2005 4:53:17 PM
From: kailuabruddah  Read Replies (1) | Respond to of 110194
 
Starbucks includes their coffee costs within the category of:

Cost of sales including occupancy costs

in their Quarterly and Annual Reports. There is no clear increase visible yet - but if the price of coffee continues to rise at say 15% per year, they will feel it in their margins...

KSS, JCP, KMRT, BONT, TGT are all trading near their 52-Week highs - until they start to breakdown I think it's easier to short stocks that are already 10% to 20% below their highs on weak-volume rally attempts... in particular, stocks that struggle at their 50-Day MA make the best candidates IMHO...

In addition to SBUX (which I'm already short), I'm contemplating:

PENN
MGG
WCI




To: ild who wrote (28324)3/10/2005 7:04:16 PM
From: benwood  Respond to of 110194
 
As I recall, a doubling of the cost of coffee increases the cost of a latte about a dime. Most of the cost is labor, overhead, and even milk is several times more expensive than the coffee. Even the beans would only go up a couple bucks if the raw beans doubled. At some point, rising prices at Starbucks & their ilk will be met with the economic downdraft, and I would expect the tide to turn for them.


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