- The technical picture implies that the price may advance above $230 very soon
- McDonald's Q3 total comp sales were down 2.2%
- The company hiked its quarterly dividend by 3% to $1.29 per share
Shares of McDonald’s have advanced from $180 above $229 in less than several months and the current price stands around $228. The next several months will be competitive for the fast food industry and the business of McDonald’s is also under the pressure from lower revenues due to COVID-19.
Fundamental analysis: McDonald’s hiked its quarterly dividend by 3%
McDonald’s Corporation (NYSE: MCD) is an American fast-food company, the company is founded in 1940 and today McDonald’s is the world’s largest restaurant chain by revenue. McDonald’s is the world’s second-largest private employer with more than 1.7 million employees (behind Walmart).
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McDonald’s stock is struggling to get above the important resistance at $230 despite the fact that “bulls” remain in control of the price action. When trading McDonald’s stock, investors should have in mind that this is a stable company with a good position on the market.
The company is adding baked goods back to the menu for the first time in more than eight years. The new apple fritter, blueberry muffin and cinnamon roll menu items will be at participating locations in the U.S. beginning on October 28.
McDonald’s increased its revenue in 2019 to $21.07B from $21.02B in 2018 and the growth projects will ensure that the numbers will be moving up in the future. Another useful information for potential investors is that this company has paid more than $9B dividends to its shareholders in the last three years and this number can be even bigger in the future.
If you decide to invest in McDonald’s stock you should have in mind that there are also several negative facts that are connected with this company. McDonald’s reported recently that Q3 global company sales were down 2.2% from a year ago.
The sales results were impacted by negative comparable sales in Latin America and China together with the COVID-19 pandemic. Despite this, the company hiked its quarterly dividend by 3% to $1.29 per share.
There are some obvious risks when it comes to trading McDonald’s (NYSE: MCD) shares but as long the price of McDonald’s is above $200 this stock remains in the bull market.
Technical analysis: The trend line represents a very strong support level
When we take a look at the chart above ( one year period), we can see that the price of this stock has advanced from $124 above $229. As long the price is above this trend line this stock is in the “buy” zone and there is no indication of the trend reversal.
If the price falls on the trend line and if we get a “bullish” confirmation candle it would be a very good entry point for short-term traders who are trading with “stop-loss” and “take profit” orders. The trend line represents a very strong support level, if the price breaks this trend line it would be a very strong “sell” signal and we have an open way to $200.
If the price jumps above $230 it would be a signal to buy McDonald’s stock and we have the open way to $240. Rising above $240 supports the continuation of the bullish trend and the next price target could be located around $250.
McDonald’s shares have been moving in an uptrend last several months and for now, there is no signal of the trend reversal. The technical picture implies that the price may advance above $230 (an all-time high) very soon but in my opinion, this stock is a little overvalued. McDonald’s is a stable company with a good position on the market but the current risk/reward ratio is not good for long-term investors.