Shake Shack, Inc. (SHAK:NYSE)
Price at Preparation: $109.90 (Feb 10th, 2025)
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What they do
Shake Shack Inc. (SHAK:NYSE) is engaged in serving an American menu of food and beverages, crafted from a range of American foods.
- Burger category includes ShackBurger, SmokeShack, Shroom Burger (a vegetarian burger), Shack Stack, Avocado Bacon Burger and Hamburger.
- Chicken category includes Chicken Shack and Chicken Bites.
- Wines offered include the Shack Red, Shack White, and Shack Rose.
- Non-alcoholic beverages include serving Abita Root Beer, Shack-made lemonade, organic fresh brewed iced tea, Fifty/Fifty, Honest Kids organic apple juice, and Shack20 bottled sparkling waters.
The Company operates approximately five hundred locations including domestic and international.
Welcome back to the Theta Bandits Top Pick Tuesday, where we search the markets to serve you up fresh ideas that could be a potential winner in any portfolio.
Opinion
Before we dive into today’s pick, we want to highlight that today is more aggressive than usual in that this is centered around the company’s earnings report on February 20th, 2025. This should be approached with caution.
Shake Shack Inc. (SHAK:NYSE) has their quarterly earnings report (ER) next week as pointed out above. An ER event is guaranteed for volatility, which for investors and more conservative risk profile people is not in the comfort zone. However, for traders this volatility gives an opportunity with a good risk /reward. As such we look to the history and produce a probability for repeating the pattern, and hopefully we are right. With trades like this we cannot stress enough, only risk what you are willing to lose.
A second data point to note is that McDonald’s Corporation (MCD:NYSE) reported February 10th, 2025 and jumped up +$14.12 USD or +4.80%. These two companies share the same sector and could potentially be a tell for a similar move.
Finally, looking past the volatility event to the longer term, the analyst street consensus has 11 Buys, 13 Holds, 1 Sell with 12-Month Price Targets (PT) as follows:
- Low: $107.00 USD (-2.64%)
- Average: $135.77508.50 USD (+23.54%)
- High: $160.00 USD (+45.59%)
Plan
As usual, find the chart below with following colors marked:
- Blue: 52-week high.
- Red: 52-week low.
- Green: 12 Month PTs (high / avg / low).
- Orange: Support/resistance lines.
- Yellow: Our plan.
Included in visual aid below there are multiple pieces of information on it, some which you have seen before such as the blue and red lines for the 52-week high and low and green lines to indicate the 12-month PT for low, average and high. Let’s get into the yellow markings.
Continuing from the opinion section above, there are multiple yellow circles which are highlighting the ERs over the past 4-quarters, plus the next ER coming up. Note those marked (1), (2) and (3) follow a very similar pattern around ER with a short run up to the event, a big move up with a little continuation before starting to fall back. The circle not numbered is the only ER in the last year which did not follow the pattern. Which gives a 75% chance for the upcoming ER to follow the pattern. As a protection method for this type of trade, set a stop loss using the support lines below according to your risk profile. Since this is a volatile event, another potential method could be to play a small initial amount for the event and IF we get the reaction we are looking for, then add more for continuation or just take the win.
Using the support/resistance lines and looking back over the past year, we can see this price forms a strong support as this level, with the price hitting the current support/resistance level multiple times. This is another piece of information to use for the run-up to the ER event, as the price should bounce off this level to the upside.
Usually, we would give price targets to hit, but since the main aim is the ER event, this is not applicable. Any profit is a win to be taken. Post the event when the volatility subsides this trade can follow the regular steps we usually go through, securing profit as the price moves through the support / resistance levels with an aim for the 12-month avg PT of $135.77 USD or higher as a bonus.
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RISKS
The goal is to grow capital by securing profits along the way and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.
If you’ve been finding our picks helpful, imagine what trading live holds. You know what to do 👇
Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.
