McDonald’s Corporation (NYSE:MCD) — MCD stock took off last October after the fast-food chain introduced its “All Day Breakfast” in an effort to boost waning sales. But when McDonald’s announced Wednesday it would be expanding its All Day Breakfast menu, it was not met with the same enthusiasm, and MCD stock fell 0.1% on the day.
Some analysts are concerned that management is relying too heavily on All Day Breakfast for revenue growth and that the company faces tough year-over-year comparisons due to its initial success. But Mickey D’s is still the largest fast-food restaurant company in the world, with 35,000 stores in almost 120 countries, and the dominant brand in its industry.
The company reported better-than-expected first-quarter revenue and earnings, which included a 6% jump in global comparable sales. For the full year, earnings are projected to grow 11.5% to $5.55 per share and increase another 11.5% in 2017 to $6.19.
After trading in a tight range between $90 and $100 for almost a year, MCD broke out in October, running to a high just below $121 by the end of the year. Shares then traded in a new range between $116 and $121 until mid-March. The new advance peaked at an all-time high of $131.96, made on May 10.
Since then, profit-taking and a host of external global problems have resulted in a pullback in MCD stock to the support line at $116. On Wednesday, shares closed at a resistance line drawn from two sources: 1. the May high at $131.96, and 2. the line connecting the December closing high to Wednesday’s close.
Primary support is at the 200-day moving average at $118, and then the line at $116. Accumulation has been average, but a strong buy signal was issued by the MACD indicator on Friday.
Traders should look to buy MCD stock at $120 with a target of $130 for a potential return of 8%.
McDonald’s also pays a quarterly dividend of 89 cents per share, for a forward annual yield of almost 3%. The company has a solid history of raising dividends, having boosted its payout for 40 consecutive years.
