Buy Alert: November 16, 2012

Marcus Haber | November 16, 2012

Buy Alert: November 16, 2012

Trade Details

Buy Starbucks (SBUX) December 2012 $50 Calls for $1.10 or better

Why?

Starbucks, the world’s largest operator of coffee shops, has managed to post strong numbers despite the struggling economy. The company’s mega popular brand name keeps customers coming back again and again for their favorite coffee drinks.

Now, SBUX is trying to do for tea what it has done for coffee.

You see, the company just announced the acquisition of Teavana (TEA), a popular retailer of teas, for $620 million. Analysts expect TEA to add $0.01 to SBUX’s earnings per share. It also shows management isn’t going to be shy about finding ways to grow revenues and profits, especially with the holiday season nearly here.

So why are SBUX shares down? It’s most likely due to fears of the fiscal cliff. However, I strongly believe the fiscal cliff issues will be resolved one way or another before the end of the year. More importantly, SBUX shares are sitting right at the 50-day moving average and in perfect position to climb to the 200-day moving average.

Let’s buy SBUX calls in order to capture this potential move higher.