Happy Monday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟩 | US Stocks Rose on Monday. The S&P 500 rose roughly 1% and closed at a new record high. The Dow also rose nearly half a percent, breaking its four-day losing streak.

• 📈 | One Notable Gainer: Shares of Tesla surged 5% as investors have become more bullish on the stock following the confirmation of Musk’s $47 billion pay package.

• 📉 | One Notable Decliner: Virgin Galactic’s stock tumbled 15% after its 1-for-20 reverse stock split took effect. Many investors saw this stock split as a last-ditch effort to save a company clearly in decline.

• ☕ | Tomorrow's Trade: A Well-Priced Cold Brew. Scroll down for more.

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LAST FRIDAY’S POLL RESULTS

Are you bullish or bearish on AFC Energy (AFGYF) over the next 12 months?

🟩🟩🟩🟩🟩🟩 Bullish

🟨🟨⬜️⬜️⬜️⬜️ Bearish

MARKET MOVERS

Adidas, TDK, & Chipotle

ADDYY (-2%) Adidas is investigating accusations that its employees in China have been taking kickbacks from suppliers (Investopedia)

STTK (-20%) Shattuck Labs had its stock downgraded by BTIG from Buy to Neutral, citing ambiguity in its recent clinical trial data (Market Beat)

LBX (-3%) Building materials manufacturer Lousiana-Pacific Corp had its stock downgraded to Sell by Goldman Sachs amid market challenges (Investing.com)

TTDKY (+3%) Apple supplier TDK successfully developed a material for its solid-state batteries to increase battery life performance in wearable devices (CNBC)

CMG (+3%) Restaraunt chain Chipotle announced a 50-for-1 stock split, which will be one of the largest stock splits in NYSE history (IBD)

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OVERHEARD ON THE STREET

MW: Minneapolis Fed President Neel Kashkari said that it is a “reasonable prediction” that the Fed will wait until December to cut interest rates.

CNBC: Oil prices are moving higher after snapping a three-week losing streak despite mixed economic data out of China.

NYT: Lawmakers in California last month advanced about 30 new measures on artificial intelligence in one of the biggest efforts yet to regulate AI.

FT: Texas now generates more electricity from solar power than coal, and its solar output has surged past California's.

Reuters: Novo Nordisk CEO Lars Jorgensen is set to testify in front of the US Senate on the high prices for weight loss drugs Ozempic and Wegovy.

TOMORROW’S TRADE IDEA, TODAY

A Well-Priced Cold Brew

Starbucks Could Be Oversold

Starbucks (SBUX) has been slumping. Same-store sales are down globally, and the stock has fallen over 14% YTD. However, the brand has continued to grow rapidly thanks to its ability to adapt, improve efficiency, and offer a wide range of products.

The fact that the number of Americans regularly buying coffee at coffee shops has nearly doubled over the past year certainly isn’t a bad sign for the global coffee seller.

Analysts now think its stock could be oversold. If the company’s strategies continue to prove successful, the stock could be in for sizable gains.

Dominating the Market

The domestic coffee shop market rose to almost $50 billion this year, an 8% increase from the year prior, according to Project Café USA 2024. Starbucks currently commands 40% of that mammoth market. 

The company has continued growing despite challenges stemming from inflation, boycotts, unionization, and growing competition. It added around 2,300 new stores globally over the past 4 quarters, with average annual sales for company-owned stores hitting $2.3 million in FY2023.

Changing It Up

The coffee giant is quick to adapt, and its flexibility has paid off. Starbucks has leaned heavily into cold beverages over the past decade, and refreshing creations now make up around 60% of its drink orders. New products are popping up on its menu to cater to younger demographics. 

Starbucks is also making a concerted “convenience” effort, focusing on drive-throughs and mobile orders. Mobile ordering now makes up 31% of the chain’s transactions. 

To improve efficiency, the company has also reinvented its workstations so baristas can stay in one place while preparing orders. 

Shares are trading at 20 times forward earnings, compared to a five-year average of 28 times. It could be a strategic time to buy a latte.

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ON OUR RADAR

AP: The IRS plans to end “partnership basis shifting,” a major tax loophole for wealthy taxpayers, which could increase tax revenue by $50 billion over a decade.

Reuters: The US is as many as 15 years behind China in developing high-tech nuclear power as China’s extensive government financing gives it the edge.

USA Today: Nationwide Insurance announced it would cancel coverage for 100,000 pets across the country, blaming the rising costs of veterinary care.

Bloomberg: China’s home prices fell at a faster pace in May, as the country’s forceful efforts to support the property market take time to revive demand.

AP: The US surgeon general has called on Congress to require warning labels on social media platforms similar to those now mandatory on cigarette boxes.