McDonald's Pauses Reopening Plans; is Wendy's a Better Buy?

Ed Ponsi

On July 1, the U.S. reported a record 52,789 new confirmed coronavirus cases in one day. It was the first time that figure exceeded 50,000.

That news is hitting restaurants all over the country. In New Jersey, Governor Murphy announced this week that indoor dining, which was scheduled to resume on July 2, has been indefinitely postponed. 

Meanwhile, McDonald’s (MCD), which was scheduled to reopen its restaurants to dine-in service, has decided to delay that move for at least another 21 days. 

Nearly 99% of the fast food giant’s locations are still offering drive-through service. Thanks to that option, McDonald’s reported sales were off by just 30% in April and May.

Looking at McDonald’s chart, the stock has regained about two-thirds of its losses since it peaked in February. McDonald's is struggling to climb above its 50-day moving average (blue), and is trading well beneath its 200-day moving average (red). 

MCD

Compare this to Wendy’s (WEN), which is maintaining its position above its key moving averages. Wendy’s 50-day MA crossed above its 200-day MA (shaded yellow), a sign of increasing momentum.

WEN

Despite the market turmoil of recent months, Wendy's is trading just 7% below its all-time closing high. Based on the charts, both stocks should do well, but right now, Wendy's is the better buy.