Dunkin Brands and Starbucks: The Comparison May Surprise You

By | February 26, 2017

Dunkin Brands (DNKN) has outperformed Starbucks (SBUX) by over 20% in the last 52 week period. That percent difference has moderated year-to-date but the more recent price action of the individual shares suggests that the divergence could return.

1000149904. DNKNSBUX

1000149906. DNKN SBUX

The daily chart of Dunkin shows the stock gapping higher earlier this month and then consolidating in a asymmetrical triangle pattern that together with the sharp jump formed a pennant or flag pattern. These patterns usually resolve higher and have a target price projection measured by adding the height of the flagpole to the breakout point. Starbucks, on the other hand, gapped lower at the end of January and is still attempting to close the upside gap. Last week three weak doji-like candles formed a potential Tri-Star pattern, and the stock looks more likely, at this point in time, to fail at this level or at least require more time to consolidate.

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