Is McDonald’s a buy or sell in November?
- The technical picture implies that the price may advance above $230 again
- The current risk/reward ratio is not good for long-term investors
- McDonald's hired Reginald Miller to be the company's new chief diversity officer
The US elections are closely watched, according to the latest news Biden is taking the lead in Georgia, Pennsylvania, Nevada and Arizona but the US presidential election continued to progress with a winner not yet officially announced. Shares of McDonald’s have advanced from $168 above $230 in less than six months and the current price stands around $216.
Fundamental analysis: Risk/reward ratio is not good for long-term investors
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 shares have been moving in an uptrend last several months and for now, there is no signal of the trend reversal. 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.
McDonald’s reported 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. McDonald’s has paid more than $9B dividends to its shareholders in the last three years and this number can be even bigger in the future.
The company added 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 are at participating locations in the U.S. from October 28.
The company could also bring back the McRib sandwich for the first time on a national level since 2012. It is also important to mention that McDonald’s hired Reginald Miller to be the company’s new chief diversity officer.
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 $230. 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 $220 it would be a signal to buy McDonald’s stock and we have the open way to $230. Rising above $240 supports the continuation of the bullish trend and the next price target could be located around $250.
The attention of investors is focused currently on the US presidential elections and the US stock market is supported despite ongoing election uncertainty. Joe Biden has a good shot at becoming the 46th President and Biden’s camp hopes they will cross the threshold of 270 very soon. When trading McDonald’s stock, investors should have in mind that this is a stable company with a good position on the market. The technical picture implies that the price may advance above $230 (all-time high) again but in my opinion, this stock is a little overvalued.
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