(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Is this the Starbucks turnaround you've been waiting a decade for? Or … and hear me out … are we just at the point of the cycle where investors are prizing reliability over growth? Starbucks is the epitome of reliability. Caffeine is a drug. We all need it everyday — and sometimes multiple times per day. There are many dealers of this drug, but Starbucks is Scarface. Unparalleled. No matter what happens this year, you're drinking coffee and so is everyone else. Even in an economic downturn, the daily Starbucks run is seen as something of an "affordable luxury" - the kind of thing people just do not take away from themselves even when they're cutting back elsewhere. Either investors are buying into the potential for SBUX to find a growth spurt, or they're buying into the dependability of the business to remain steady come what may. Doesn't matter to me which is which, so long as the rally can continue. When a stock is under accumulation, I leave it to the sell-side to come up with the story explaining the price. Price itself is good enough for me. And so with that throat clearing out of the way, ladies and gentlemen Starbucks has just become one of the Best Stocks in the Market. It's true. Sean will get into the turnaround possibly underway. Best Stock Spotlight: Starbucks Corp. (SBUX) Sean — After last week's turnaround story on Target , we now focus our attention on another fallen angel in the consumer discretionary sector, and this one resides on nearly every street corner in the U.S. Here's Starbucks (SBUX) in price only, the past five years: When you zoom out since inception, SBUX has had awesome performance annualizing about 20% a year. But if you look at the chart above showing five year performance, it is down 20%. In total returns the past three years it has annualized 3% a year, and its annualized 1% a year over the past five years. This is during a five year period where the discretionary sector has annualized 8% a year and the S & P 500 has annualized 13% a year. The coffee giant has had its share of struggles thus far this decade. To start, Starbucks' second largest market, China, has been decimated by the local competition (Luckin Coffee) with same store sales declining 14% year-over-year in 2024. A majority of the China business is slated to be sold off this year. But more importantly, SBUX has had issues back at home. As we are all well aware, SBUX aggressively raised prices post-Covid, and now we are all paying $8 for an iced latte. This eroded the value proposition and led to a 7% sales decline and a 10% drop in North American traffic in 2024. They also leaned into the mobile ordering craze post-Covid, which destroyed the in-store experience, again weakening the value prop and deteriorating the brand. All of this negativity led to poor fundamentals and poor stock prices, which led to leadership changes and employee walkouts. So why is the stock seeing some short-term momentum? Grab some cold brew and let's get into it. As of their last reported quarter in January, U.S. transactions grew across all dayparts (Starbucks tracks sales by time of day) for the first time in eight quarters. U.S. comparable sales grew 4% while international sales grew 5% year-over-year. And all of this transaction growth is leading to a revenue reacceleration. Net revenues grew 6% year over year, which was the third positive top line quarter of growth in a row. The new CEO is a branding superstar too. Brian Niccol started at P & G and Pizza Hut in the 1990s and early oughts, led Taco Bell's marketing department and then the whole company in the 2010s, and then was the CEO for Chipotle during their massive run. Looking forward, SBUX expects global comp sales growth of 3% or better with the U.S. matching that threshold in 2026. "Back to Starbucks" is Niccol's turnaround strategy aimed at restoring the premium coffeehouse experience. The goal is multifaceted: simplifying the menu, improving barista-customer connection and fixing store operations. Their initiatives are expected to expand margins on a full-year basis, with administrative expenses running below FY2023 levels following last year's structural reorganization. Now here's Josh on the technicals… Risk management Josh — Let me not bury the lede. I think the stock can get back to the August 2021 high of $120 without a lot of trouble as it clears above this $100 level. Starbucks has quietly rebuilt a constructive technical setup over the last several months and is now pushing into a key breakout area just above $100. The stock spent most of the second half of 2025 chopping sideways between roughly $82 and $95, digesting the prior selloff and allowing the 200-day moving average to flatten out. That long consolidation resolved higher in January when SBUX reclaimed the 200-day (now $89) and began printing a series of higher highs and higher lows. Momentum has been steadily improving alongside price. The 50-day moving average has turned up and is now rising through the mid-$90s, acting as short-term trend support. RSI is in the mid-60s, which confirms positive momentum without being overbought. The move through $100 puts the stock at the upper end of the entire one-year range, making this a clear pivot level. We now have both moving averages going in the right direction and a shareholder base seeing strength for the first time in a long time. Why would anyone be a seller here? From a risk management standpoint, the most important level to monitor is the rising 50-day around $94–$95. As long as price stays above that line, the current uptrend remains intact and pullbacks are likely to be bought. A break back below the 50-day would suggest the breakout failed and could open the door for a retracement toward the 200-day near $89. On the upside, a sustained move above $100–102 clears the final band of resistance from last spring and would put the stock into open air with the potential to trend toward the $120 area based on the height of the prior range. Traders are using $95, investors can use $89. It's a good risk-reward in a name that is back in favor after an extremely long time in the wilderness. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
