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Two Ways To Play: Brewing Intimacy At Starbucks


Strengthen your portfolio in good times and bad.


Starbucks Going with More Face Time

The Wall Street Journal reports Starbucks (SBUX) will change its store- worker scheduling system so that fewer employees will work more hours at its coffee shops.

The program is aimed at reducing the company's labor expenses and improve revenues by fostering familiarity between customers and a smaller number of employees. Other companies have made similar small-box retailing moves in recent weeks - and Starbucks introduced this program a week ago as part of its broader restructuring effort. Scott Reeves wrote about this strategy on August 27th.

From the Bull Pen: The better upside play may be in Panera Bread (PNRA). Bulls can consider the upside if the stock can hold $45 support. Sell stops can be set below that level.

From the Bear Cave: The downside trade in Starbucks may be over. A better downside play could be in Yum! Brands (YUM) near $34, if and when it reaches that level.

Lilly for Imclone

Bloomberg reports Eli Lilly (LLY) has agreed to buy ImClone (IMCL) for $6.5 billion, topping Bristol-Myers Squibb's (BMY) $62 per share hostile bid in July. Investors in Imclone will get $70 per share, marking a 51% increase over the Bristol-Meyers' offer.

The transaction isn't subject to any financing conditions and is expected to close in late 2008 or early 2009. Lilly will incur a one-time charge to earnings for acquired in-process research and development. Lilly also sees the deal adding cash basis in 2012.

From the Bull Pen: A stock with some upside may be Biogen (BIIB). Sell stops can be set near $48. Another option is to use the biotech ETF (IBB). Sell stops can be set below $75.

From the Bear Cave: We've mentioned an upside play in Pfizer (PFE) recently. But the stock is coming close to $20 resistance. Bears can attempt the downside in the stock if the stock fails at that level.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng -4.97%, Nikkei -4.25%, Sensex -5.78%, Taiwan -4.12% and Shanghai -5.23%.

Quickly glancing towards Europe, we see the CAC -5.59%, DAX -5.09%, FTSE -4.91%

As of 8:40 a.m. EST, S&P Futures are trading -24 points to 1083 and Nasdaq futures are -31 points to 1446.

A Look At Commodities

Commodities are mixed. Crude oil is trading -3.90 to 89.98. Gold is +27.30 to 856.20. Silver +0.7830 to 11.410, and copper -12.15 to 258.35.

The dollar index is +0.797 to 81.118.

Nothing on the radar today, but click here to see the rest of this week's events.

Good luck and have a great week!

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No positions in stocks mentioned.

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