This 2017 success story saw its shares sell off with the rest of the markets in January, only to see its recovery run short and then sideways. I went long MCD a bit back at very close to the recent lows, but only accumulated 15% of what I had intended to grab before the shares got away from me. Recent fundamental positives for the name include rising margins, as well as very strong current and quick ratios.
The stock trades at about 19 times forward earnings, which makes it mildly more expensive than the market as a whole. That also makes Monday's earnings release rather crucial, but the stock seems to trade more on technicals than on fundamentals. Let's take a look:
What we see here is a name that defied a death cross in early April, as well as a stock with an absolutely horrible-looking Chaikin Money Flow.
The shares found resistance at a 61.8% Fibonacci retracement of the late-January-through-early-March move. However, going the other way, support was found above a similar 61.8% retracement of the early March low through the mid-April high. That support has now been found almost precisely at $155 three times now.
McDonald's needs a hold above $166 for a breakout, but I see that as excessively optimistic for now and took profits on the stock Monday morning at $164.90 shortly after the opening bell. I'll look to buy MCD back later on any future weakness.
Short-Term Target Price: $165
Point of Replenishment: $153
Panic Point: $148
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(This column has been updated to reflect McDonald's Monday closing price.)
At the time of publication, Guilfoyle had no positions in the stocks mentioned.