Credit Suisse, Call Traders Get Behind MCD and SBUX Stocks

The strong year continues for restaurant stocks McDonald's and Starbucks

Jun 25, 2019 at 2:23 PM
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The shares of McDonald's Corp (NYSE:MCD) and Starbucks Corporation (NASDAQ:SBUX) have rallied to record highs this year, and brokerage firm Credit Suisse sees more upside ahead. Some options traders have also taken interest in the stocks recently, so let's take a closer peek at MCD and SBUX shares below.

McDonald's was started at an "outperform" at Credit Suisse, which set a price target of $230, well above the stock's record high of $206.39, a peak it matched earlier today. The analyst note discussed the restaurant chain's investments in new technology, saying they should help the company increase its moat compared to its peers.

Call trading today is higher than the daily average, and the most popular position by far is the weekly 6/28 207.50-strike call. Data suggests buy-to-open activity is taking place, meaning bulls are betting on more upside through expiration at Friday's close.

This just extends a recent run of call buying at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). MCD's 10-day call/put volume ratio at these exchanges is 2.10, showing call buying has doubled put buying in the past two weeks. Taking a broader view, peak open interest is at the July 200 call.

Turning to Starbucks, the shares earlier hit an all-time high of $85.20, bringing their year-to-date gain to almost 31%. Credit Suisse started coverage with an "outperform" rating and $92 price target. More price-target hikes could come through, too, since the shares are already trading above their average 12-month price target of $79.64.

Weekly calls are popular on SBUX today, with new positions opening at the weekly 6/28 85- and 86-strike calls. But while peak open interest resides at the July 90 call, there has actually been unusual put buying during the past 10 days at the ISE, CBOE, and PHLX. The two-week put/call volume ratio there of 1.55 ranks in the 91st annual percentile.


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