3 Restaurant Stocks RBC is Bullish On

There's been unusual call activity on Starbucks in recent weeks

by Josh Selway

Published on Dec 10, 2019 at 10:05 AM

Brokerage firm RBC last night began coverage on a number of restaurant stocks, including taking bullish outlooks on big names McDonald's Corp (NYSE:MCD), Domino's Pizza, Inc. (NYSE:DPZ), and Starbucks Corporation (NASDAQ:SBUX). Let's take a quick look at the details around the stocks, and how they're trading this morning.

For blue chip MCD, RBC handed out an "outperform" rating and $218 price target, citing the company's moves to modernize its stores, while adding that it's confident in the current leadership following the recent ousting of CEO Steve Easterbrook. The stock was last seen 0.1% higher at $194.92, holding above recent support near the $192 level and 320-day moving average.

Turning to DPZ stock, RBC gave it an "outperform" rating and $337 price target, well above the current perch of $286.78. This comes after the shares were turned away near the round $300 level, near the site of their 52-week highs from April. Short-term options traders, meanwhile, have positioned themselves for more upside, at least judging by the Schaeffer's put/call open interest ratio (SOIR) of 0.74, which sits in the low 3rd annual percentile.

As for SBUX, RBC also deemed it worthy of an "outperform" rating, while giving out a $97 price target. The shares of the coffee giant are up 0.7% today at $86.69, which would actually be their highest close since September, as the $87 level has capped their upside in recent months -- though the 200-day moving average has offset that with strong support.

Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows unusual interest in long Starbucks call options. The equity's 10-day call/put volume ratio is 4.03, and ranks in the 100th annual percentile.

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