McDonald's Stock a Top Pick for 2018

Nomura expects a strong year from McDonald's, thanks in part to its new Dollar Menu

by Josh Selway

Published on Jan 2, 2018 at 9:09 AM

McDonald's Corporation (NYSE:MCD) is set to start the new year on the right foot, thanks to a bullish note from Nomura. The brokerage firm named the fast food giant its top pick for domestic restaurant stocks, expecting a number of factors -- including a new Dollar Menu -- to lead to better-than-expected results over the next two years. As such, the covering analyst raised his price target to $190 from $180, representing a 10.4% premium to Friday's close at $172.12.

In pre-market trading, MCD shares are up 0.5%, trying to carry over 2017's momentum. Specifically, the Dow stock rose over 41% for the year, and hit a record high of $175.78 on Dec. 18. The security has since found support in the form of its rising 40-day moving average.

As such, sentiment is mostly upbeat toward the stock. There are 26 analysts covering McDonald's, and 21 say it's a "buy" or "strong buy," with zero "sell" recommendations to be found.

Options traders have been bullish, too. That's according to the equity's 10-day call/put volume ratio of 1.56 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the high 86th annual percentile, showing a much stronger-than-normal demand for long calls over puts.

And MCD could be a promising target for near-term options traders, since its Schaeffer's Volatility Index (SVI) of 12% ranks below 77% of readings from the past year -- hinting at unusually low volatility expectations at the moment. Plus, the stock has a Schaeffer's Volatility Scorecard (SVS) of 84, showing a strong tendency to top options traders' volatility expectations over the past year.

Semiconductor Sell-Off Could be Good News for This Chip Stock
Pullbacks to the 320-day moving average have marked buying opportunities
Time To Bet On a Netflix Stock Rally
The shares are trading near a trendline that has historically bullish implications
Molina Healthcare Stock Could Make a Big Move Higher
A "buy" signal is flashing for MOH again
From Schaeffer's Pro Traders
Weekly Options Secrets Revealed

Direct from our Schaeffer's traders, your FREE guide to winning with weekly options!


Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Biotech Stock To Buy Now
Could this biotech bet bank you 1,700% profit? Contributed by Raging Bull
Amedisys Carves Out New Highs on Oppenheimer's Latest Hike
AMED nabbed another new record high earlier today
Walmart Earnings, Tesla Share Spotlight With Turkey, Trade
The retailer's earnings have the Dow headed toward a weekly win
The Biotech Stock To Buy Now
Could this biotech bet bank you 1,700% profit? Contributed by Raging Bull