Starbucks shares are heating up, and one top technical analyst is betting the stock is gearing up for an even bigger rally when it reports earnings later this week.
The coffee giant was moving higher on Tuesday afternoon after the company announced an expansion of its product delivery services. Carter Worth, head of technical analysis at Cornerstone Macro, notes that the stock's ability to outperform the broader market in the last month of 2018 is a key indicator of its resilience in turbulent times.
"That's a very exclusive club, and Starbucks managed to do that in one of the worst Decembers on record; [its] relative strength [is] very impressive," he said Friday on CNBC's "Options Action."
Starbucks shares jumped 10 percent following the company's strong fourth-quarter earnings results in November. While the stock has since given back the majority of those gains, Worth's charting reveals that since the report Starbucks has been able to successfully rebound off its uptrend line.
"What the stock has done is pivoted right back literally to the point of the beat and has started to come to life," Worth said.
Additionally, Worth's charting reveals the start of a bullish wedge formation. This suggests that the stock's recent period of consolidation between its support and resistance lines will eventually push the stock "up and out."
Shares of Starbucks are now up nearly 8 percent from the market lows in December and up nearly 38 percent from its intraday 52-week low of $47.37 last June.
"The presumption is on its next earnings [Starbucks] gaps again as it did last quarter and the stock clears all of these hurdles — I'm a buyer," Worth said.
Starbucks reports its latest quarterly earnings after the bell on Thursday. The stock was trading higher Tuesday afternoon around $65.38.
