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Running Head: STARBUCKS CORPORATION: TECHNICAL ANALYSIS AND ENTERPRISE VALUE1Starbucks Corporation: Technical Analysis and Enterprise ValueTaylor M. IveyUniversity of Maryland, University College
Running Head: STARBUCKS CORPORATION: TECHNICAL ANALYSIS AND ENTERPRISE VALUE2I.IntroductionIn 1971, the first Starbucks store opened as a small business in Seattle, Washington (Company Information, n.d.). Since then, the Starbucks Corporation has grown substantially and is now known as the “premier roaster, marketer and retailer of specialty coffee in the world” (Starbucks Form 10K, 2016). Now reaching over 75 countries all over the world, the Starbucks Corporation specializes in high-quality coffees, handcrafted beverages (to include coffees and teas), and various food items. As one of the most popular specialty coffee companies in the world, stocks under the Starbucks Corporation are traded daily on NASDAQ. For investors to determine whether it is safe for them to purchase or sell their Starbucks Corporation stocks, the investors need to analyze current stock prices, and predict what future stock prices may be. They can do this by looking at numerous indicators under a technical analysis. The purpose of this report is to conduct a technical analysis on the Starbucks Corporation. As part of the technical analysis, the report will analyze the Standard Deviation, the Simple Moving Average and Exponential Moving Average, the Bollinger Bands, the Moving Average Convergence/Divergence Oscillator, the Relative Strength Index, and Aroon Oscillator. It will be with these common indicators that an analysis can be conducted on the stock prices of the Starbucks Corporation and whether or not it is safe for investors to invest or sell their stocks. II.Analysis SectionStandard DeviationWhen looking at a set of data, “the amount of variability or dispersion around an average” (Standard Deviation). When analyzing the date, the larger variability between the actual value and the average value of the data, the larger the standard deviation, but when the variability is smaller, the standard deviation is lower. With
Running Head: STARBUCKS CORPORATION: TECHNICAL ANALYSIS AND ENTERPRISE VALUE3this information, analysts and investors would be able to measure and analyze both the expected risk and the price movements of the stock. The chart below, provided by Stock Charts, analyzes the Starbucks Corporation Standard Deviation on a daily basis from July 26, 2017 to January 19, 2018. When analyzing the chart, it is easy to see, during the 178 day range, the Standard Deviationranged from 0.25 to 2.00. This means, the average price changes of the Starbucks Corporation stocks would range from $0.25 to $2.00. For any price movements of theStarbucks Corporation stocks, if the price were to move higher, or lower, than one standard deviation ($0.68), depending on which way it moved, it would show an above average move whether it be strong or weak. While there has not been any significant changes in quite a bit of time, there was a significant increase in the stock standard deviation in August of 2017 when it went above $2.00.