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Whitbread heads towards all-time highs

Ahead of next week’s annual general meeting, Whitbread is making a fresh attempt to hit all-time highs.

Whitbread owned Costa coffee
Source: Bloomberg

The performance of Whitbread in the last decade has been impressive and long term investors will be more than satisfied with the shares growth, however the last four months in contrast have seen the share price move laterally. Considering the divergence we have seen between the 200-day moving average and the share price, this correction in the longer-term bull run is maybe not too surprising.

We have seen a number of institutions increase their ratings, which has encouraged IG clients to currently be 86% long of the shares. It is expected that the restaurant arm of the business will help deliver good figures, even if weather has hampered the growth of its Costa coffee division. It does appear coffee consumption at Costa has helped the company; five years ago 11% of the country went to a coffee outlet every day compared with 20% today.

The 50- and 100-day moving averages are converging just above the 4115p level, and this should offer support in the short term. Should next week’s figures prove as good as expected then a retest of the highs from earlier in the year at £44.40 could emerge.

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