Traders in search of tasty trade setups should take a bite out of restaurant stocks here. A weekend scan for stocks to buy boasting top-notch trends revealed more than a few eateries beckoning to profit seekers.
Indeed, today’s trio is offering lower-risk entries after sellers struck late last week. Two of these restaurants knocked their last earnings announcement out of the ballpark and have since gone one to notch new all-time highs. The third one received a slap on the wrist following mildly disappointing earnings but has since bounced back like a champ.
If the broader bull market continues in earnest this week, these three stocks are poised for additional gains. Without further ado, check out these three tasty restaurant stocks.
Tasty Restaurant Stocks to Buy: McDonald’s Corporation (MCD)
The double arches are flying high. McDonald’s Corporation (NYSE:MCD) shares tagged a new all-time high at $142.79 last Thursday before profit-taking delivered a slight pullback. As with any stock perched near record territory, MCD stock is flashing bullish signals across the board.
Its price trend appears to be a rocket ship on its way to the moon. Volume patterns show heavy accumulation following last week’s earnings release. And the RSI indicator just pole-vaulted to its highest levels in eons, suggesting some serious strength.
Year-to-date, McDonald’s is now up 16%. That’s some outperformance! In contrast, the S&P 500 is only up 6.8%.
While MCD stock could use a bit of backing and filling to digest the recent launch, any and all dips are a gift. If you’re willing to bet MCD makes a go at $145, buy the Jul $140/$145 bull call spread for $2.25.
Tasty Restaurant Stocks to Buy: Darden Restaurants (DRI)
Like MCD, Darden Restaurants (NYSE:DRI) scored big on its last earnings announcement. The late-March release delivered a rousing, one-day catapult to DRI shares. Since then, DRI has continued its ascent, recently notching a new all-time high of $86.44.
Its 20-day, 50-day and 200-day moving averages are stacked atop each other in bullish fashion. And volume patterns have been heavily favoring buyers in recent weeks.
Throw it all together and last week’s slight pullback is a buying opportunity. Unfortunately, DRI stock options lack the liquidity needed to justify an options trade. So we’ll stick with a straight stock purchase idea on this one.
Tasty Restaurant Stocks to Buy: Starbucks Corporation (SBUX)
Unlike its predecessors, Starbucks Corporation (NASDAQ:SBUX) was punished following its latest earnings announcement. The ubiquitous coffee chain opened 3.1% lower on Friday but rallied back sharply by the close. The location of the reversal was telling.
The $59 zone was a major prior resistance level that has now become support. It’s always a positive omen when buyers step up to defend their turf. Additionally, the 20-day moving average rests in the $59 area, so it was doubly important for SBUX stock to hold that level. With the bulls’ dominance re-asserted and Starbucks’ earnings gap well on its way to being filled, now is as good a time as any for initiating bullish trades.
Buy the July $60/$62.50 call spread for $1.10.
At the time of this writing, Tyler Craig had no positions in any of the aforementioned securities.
