Buzz Stocks: Alibaba, Amazon, and McDonald's

Today's stocks to watch in the news include Alibaba Group Holding Ltd (BABA), Amazon.com, Inc. (AMZN), and McDonald's Corporation (MCD)

Jan 29, 2015 at 9:12 AM
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Futures are signaling a higher start, as traders digest the latest raft of earnings reports. Meanwhile, among specific stocks in focus are e-commerce concerns Alibaba Group Holding Ltd (NYSE:BABA) and Amazon.com, Inc. (NASDAQ:AMZN), as well as fast food giant McDonald's Corporation (NYSE:MCD).

  • BABA is bracing for an 8% drop out of the gate, after the company reported lower-than-expected revenue for the fiscal third quarter. It's already been a rough week for Alibaba Group Holding Ltd, with the stock off 4.5% since last Friday's close to trade at $98.45, following a handful of fundamental developments. A continued slide could spark a round of downgrades and/or price-target cuts. Currently, all 22 analysts covering the shares maintain a "buy" or better rating, while the average 12-month price target of $120.31 stands in territory yet to be charted by the Wall Street freshman.

  • Ahead of tonight's quarterly earnings report, AMZN's cloud computing business unit unveiled a new corporate email and scheduling service, WorkMail, which will be launched in the second quarter. On the charts, the stock has been a long-term laggard, and is down 20.9% year-over-year to trade at $303.91. As such, short-term speculators have shown a preference for puts over calls, as evidenced by the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.55, which ranks in the 97th annual percentile. With earnings on the horizon, those purchasing premium on AMZN's front-month options are willing to pay a pretty penny. In fact, the security's Schaeffer's Volatility Index (SVI) of 51% rests higher than all other readings taken in the past year, meaning premium is relatively expensive at the moment.

  • MCD announced today that CEO Don Thompson will step down, and be replaced by the firm's current chief brand officer, Steve Easterbrook, effective March 1. The news follows a dismal showing by MCD both on and off the charts, with the equity tumbling 1.5% last week in the wake of an uninspiring fourth-quarter earnings report. Longer term, shares of MCD have surrendered more than 14% since topping out at a record high of $103.78 in mid-May, and closed last night at $88.78. Options traders have kept the faith, though, and at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MCD's 50-day call/put volume ratio of 3.84 ranks just 7 percentage points from a 52-week peak. Should the shares continue to struggle, an unwinding of these bullish bets could translate into headwinds for McDonald's Corporation.
 

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