Today’s Stock Picks are McDonalds (MCD) 238.31 and Wingstop (WING) 122.90. Both stocks are way down from their highs. McDonalds is down over 100 points since it traded for $341 on February 27th of this year. And Wingstop used to trade above $400 a couple of years ago.
We think McDonalds (MCD) 238.31 is a bargain at these levels. But, there’s a lot of Geopolitical risk now, so we would be accumulating the stock using our “Normal Buying Strategy” as seen in our Market Letter.
This would mean buying 40% of allocated funds Now, at a price of 238.31, and buying 30% more at each 20% decline from your original Buy Price, which would mean Buying at 190.40 and 142.98….which probably will never happen….unless we get a Devastating Bear Market.
Robert Baird reiterated their Neutral Rating on Sept. 25 th and reduced their Target Price to $250, from $285. BTIG reiterated their Buy rating on September 24 th and reduced their Target Price from $350 to $295. There are lots of ratings…go to Finviz.com to see them all.
Per finviz.com, there are 707.60 million shares outstanding and 13.80 million shares Short. Current Earnings are 12.31 per share, and next year’s Earnings are estimated at 17.79. The current PE Ratio is 19.35, and next year’s PE is estimated to be 17.28…very reasonable for this quality blue chip stock. It has a 3.10% Dividend Yield.
If you look at the chart, you can see where the stock crossed below its 50-Day Moving Average in March of this year….and has stayed below it ever since. But if you look at the MACD chart, you can see it made a Bullish crossover last week, and we think it will start moving up and probably cross above its 50 Day Moving Average of 253.04 in the next week or so.
Wingstop (WING) 122.90 moved up 30 points from 97.50 to 127.50 in the last 3 weeks. It’s a fairly thin stock, and finviz.com shows only 27.24 million shares outstanding. It’s got a high Short Interest of 5.02 million shares, and a high Short Float of 18.57%…which helps in a possible short squeeze. Current Earnings are 4.21 per share and a PE Ratio of 29.06, and next year’s estimated Earnings are 5.33 per share with a PE Ratio of 22.95. It carries a current Dividend Yield of 1.00%.
Raymond James reiterated their Strong Buy Rating on September 18th and reduced their Target Price to $185, from 240.
If you look at the chart, you can see it crossed below its 50 Day Moving Average back in February, and the stock sold off strongly. Last week, it crossed strongly above its 50-Day Moving Ave. We think it bottomed at 97.50 and will continue moving up. But, to be safe, we would still use our Normal Buying Strategy, ie. Buying 40% Now, at 122.90 and 30% more at 98.32, and 30% at 73.74. There is little Insider Selling.
This article was written Wednesday night, October 14th, based on Wednesday’s charts. But the charts for this article weren’t printed until 9:35 a.m. and 9:37 a.m. on Thursday, after the Market opened.
This article should not in any way to be construed as investment advice. For investment advice consult a registered investment advisor or a certified financial planner. Joe Cotton’s website is www.cottonstocks.net.
Joe Cotton is publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a former Fidelity Investments registered investment representative. Contact him at cottonstocks@hotmail.com