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4 Staple Food Stocks May Signal a Long Term Buy Signal

Staple food stocks were certainly not among the winners in 2018, on the contrary. The sector sees its leading companies sideways at best, or even weakening, over the last 3 years. This might be a situation in which some staple food stocks are close to becoming attractive. Our selection of 4 staple food stocks are close to signaling a long term buy signal, unless, of course Mr. Market decides to start the stock market crash of 2018.

Even CNBC called staple food stocks earlier this year the ‘most hated’ stocks. The fact of the matter remains that, as per CNBC, the “operating pressures like rising commodity costs are hurting profits, while rising bond yields are making the companies’ once-coveted dividend payouts less interesting to investors.”

That certainly is the case, we agree with this point. But at a certain point this effect gets priced in, and bond yields start stagnating. That point might not be now, but it will come at a point in the future.

This article is meant to start adding some 4 solid staple food stocks to your watchlist for the longer term.

Staple food stocks: Starbucks Corporation (SBUX)

The weekly chart of Starbucks shows that its stock price is in a solid long term uptrend channel. It has been consolidating in what we consider a potential bull flag. As long as price does not break below 52.25 we expect our first immediate upside target projection to hit a certain point: the bull flag resistance at 60.65.

If and once Starbucks’ stock price successfully breaks above it the next target will be 63-65 zone. Any price beyond this level is a bonus. In three years time a price of 85 – 90 should be realistic assuming price can continue to move higher gradually factoring in all the bad earning reports.

The bearish case is clear as well: if and once its price breaks below 52.25 it will fall to the 47 zone. Below that is very bearish.

staple food stocks SBUX

Staple food stocks: Mondelez International (MDLZ)

Mondelez has been very quiet with no news. That’s reflected on its stock chart, there is hardly any movement. Since its price topped in August 2015 its price has gone sideways for three years. 

However, we suspect that some bullish move will be underway.

The bullish case kicks in once price breaks above 45-46 in which case it would confirm the bull flag annotated in blue on below chart. Beyond that next target will be the 61 zone.

What happen if the bull flag fails? There is major support at 39.3, and any failure to hold this level would turn this stock more bearish.

staple food stocks MDLZ

Staple food stocks: Kraft Heinz Co (KHC)

From the monthly chart of KHC we can see that since 2013 its price was in a massive 5 years of consolidation. And if our channel is drawn correctly it should signal potential channel support or bottom.

The bearish case: if its stock price breaks below 52 then the retracement is not fully over yet, and it could continue to retrace to 41.6.

The bullish case: if its stock price starts moving upwards gradually it will hit immediate upside at 65. Once the 65 zone is breached our next projected target will most likely be around 76-77.

staple food stocks KHC

Staple food stocks: Papa Johns International (PZZA)

The weekly chart of Papa Johns presents an ambiguous situation.

Price is currently trapped between the light blue support area and pink resistance.

The bullish case kicks in once its price breaks above the 57 – 66 zone, after which it will move higher towards 90.

The bearish scenario will start one the 57-66 zone gets rejected and starts heading south in which case major support zone at around 37 – 41 should provide support. It this level fails it will make it a triple top turning the whole picture very bearish.

staple food stocks PZZA

 

The analysis is solely for educational and research purposes, not a buy or sell call. Please consult your financial adviser for investment advice in case you are interested in these stocks.

 
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