One Seasonal Trend Likely to Benefit Shareholders Has Arrived

Typically, the fall season isn’t good for the stock market. Much like a harvest season, it’s a time for reaping, not sowing. But in some parts of the economy, the fall can be a favorite time of year. Why? Because the pumpkin spice must flow.

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  • A favorite flavor of the fall season, pumpkin-themed flavoring in a variety of foods and beverages has exploded in recent years. That tends to bode well for the bottom line for a number of companies.

    The most obvious beneficiary is Starbucks (SBUX). The coffee chain has decided to release its fall flavors this week, well before the calendar hits autumn.

    The company has historically dominated the fall season, with its signature Pumpkin Spice Latte (PSL) allowing the company to hit 67.5 percent of the national market for coffee chains.

    Action to take: In the current market, shares are likely to trend lower in the coming weeks. But investors who pick up shares in the mid-$70 range, closer to the June lows, can likely fare well from here. Plus, the company won’t be reporting its fall numbers for months to come. Shareholders can grab a 2.3 percent yield in shares.

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  • For traders, the December $75 puts, last going for about $3.15, offer mid-double-digit returns in the coming weeks. If shares get down into the $70 range, look for a call option further out to benefit from the next rebound in shares.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.