Best Dividend Stocks June 2021

In my experience, great dividend stocks have a few characteristics: strong fundamentals, increasing dividend distributions over time, and bullish trading activity in the shares.

The hallmark way I go about finding the best dividend stocks…the outliers, is by looking for quiet Big Money trading activity. Oftentimes, that can be institutional activity. I’ll go over why following the Big Money is so important in a bit. But, the 5 stocks I see as long-term dividend growth candidates are ABT, COST, ADI, MCD, & NKE.

Over decades, I’ve learned that the true tell on great stocks is that big money consistently finds its way into the best companies out there… especially dividend paying stocks. Some of the biggest returns ever have come from holding stocks for many years and reinvesting dividends.

I want the odds on my side when looking for the highest quality dividend stocks…and I own many of them.

So, let’s get into it.

Up first is Abbott Laboratories, Inc. (ABT), which is a seller of health care products globally. Their product lines include pharmaceuticals, nutrition, diagnostics, and medical devices.

Let’s first start with the technical picture.

When deciding on a strong candidate for long-term dividend growth, I look for stocks seeing a pullback:

  • 1 month performance (-3.41%)
  • Historical Big Money buy signals

Below are the Big Money signals Abbott Labs has made since 2015. Green bars are showing that ABT was seeing big buy activity according to MAPsignals. Typically, the more Big Money signals, the stronger the stock:

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, ABT has a strong dividend history:

  • 3-year dividend growth rate (+10.8%)
  • Current dividend per share = .45
  • Forward yield = 1.54%
  • 3-year earnings growth rate (+158.04%)

Next up is Costco Wholesale Corp. (COST), which operates membership warehouses in many countries. They offer branded and off-brand retail products.

When deciding on a strong candidate for long-term dividend growth, it’s a good idea to look for many years of dividend increases.

Now let’s look at recent performance:

  • 1 month performance (+4.80%)
  • Historical big money signals

Below are the big money signals that Costco has made since 2015. I expect more buy signals in the years to come.

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Costco has a nice dividend history. Their earnings growth has been stellar as well:

  • 3-year dividend growth rate (+12.4%)
  • Current dividend per share = .79
  • Forward yield = .82%
  • 3-year earnings growth rate (+14.04%)

Next, I’m looking at Analog Devices, Inc. (ADI), which is a leading semiconductor company. They have a solid dividend history.

When deciding on a strong candidate for long-term dividend growth, recent performance in the shares is important:

  • 1 month performance (+1.92%)
  • Recent Big Money signals

Below are the big money signals that Analog Devices has made since 2015. It’s clear the stock has been in a nice uptrend:

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, ADI has a strong dividend history:

  • 3-year dividend growth rate (+10.7%)
  • Current dividend per share = .69
  • Forward yield = 1.69%
  • 3-year earnings growth rate (+24.62%)

Next, I’m looking at McDonald’s Corp. (MCD), which is a global fast-food franchise company. They operate over 39,000 restaurants globally.

When deciding on a strong candidate for long-term dividend growth, recent muted performance is not a bad thing:

  • 1 month performance (-.07%)
  • Recent Big Money signals

Below are the Big Money signals that McDonald’s has made since 2015.

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, let’s check up on the fundamentals. As you can see, McDonald’s has a strong dividend history.

  • 3-year dividend growth rate (+9.6%)
  • Current dividend per share = 1.29
  • Forward yield = 2.2%
  • 3-year earnings growth rate (+.9%)

Lastly, I’m looking at NIKE, Inc. (NKE), which is a leading athletic footwear and apparel company.

When deciding on a strong candidate for long-term dividend growth, I like to look for recent leaders:

  • 1 month performance (+2.07%)
  • Historical Big Money signals

Below are the Big Money signals that NIKE has made since 2015.

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you gotta see if the fundamental picture supports a long-term investment. NIKE has been a steady grower:

  • 3-year dividend growth rate (+10.9%)
  • Current dividend per share = .275
  • Forward yield = .81%
  • 3-year earnings growth rate (+8.22%)

The Bottom Line

ABT, COST, ADI, MCD, & NKE represent solid dividend choices. Given the strong historical dividend growth and Big Money signals, these stocks could be worth an extra look for a dividend investor.

Disclosure: the author holds long positions in personal and managed accounts in COST and long positions in managed accounts in ADI & NKE. He holds no positions in ABT & MCD at the time of publication.

To learn more about the MAPsignals process, click here: www.mapsignals.com

Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

Divergences Could Sink McDonald’s Uptrend

Dow component McDonald’s Corp. (MCD) posted an all-time high above 238 this week, adding to a modest uptick after the company beat Q1 2021 top and bottom line estimates, earning $1.92 per-share on 8.7% revenue growth to $5.12 billion. Global comparative sales rose a healthy 7.5%, underpinned by a 13.6% surge in the United States. Foreign venues reported positive but less impressive growth, highlighting continued restrictions as a result of the pandemic.

Winning the Chicken Wars

The fast food giant noted continued expansion of digital order and delivery segments, even though seating restrictions have been eased or removed in many states. It’s looking for pent-up demand to drive positive net 2021 growth, although it hasn’t been too hard to buy a Big Mac since April 2020. The company also noted victories in the chicken sandwich wars breaking out across the nation, noting their applicants “have exceeded projections especially after 4pm”.

Telsey Advisory Group analyst Bob Derrington raised his target to $260 on Tuesday, noting the company “reported strong 1Q results which included adjusted EPS of $1.92 compared to our $1.76 estimates. McDonald’s global system sales benefited from the strategic embrace of its 3-Ds (Drive-thru, Digital, Delivery), its streamlined menu, quicker drive-thru service and the successful launch of new products across its system. That included the February launch of its new Crispy Chicken sandwich within its U.S. market, which has enjoyed robust sales”.

Wall Street and Technical Outlook

Wall Street consensus now stands at an ‘Overweight’ rating based upon 25 ‘Buy’, 2 ‘Overweight’, and 9 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $225 to a Street-high $282 while the stock is set to open Thursday’s session about $25 below the median $260 target. Additional upside appears likely, given this relatively humble configuration.

McDonald’s topped out above 220 in August 2019 and plunged to a multiyear low during 2020’s pandemic decline. A strong recovery wave reached the prior high in September, yielding a failed breakout, followed by a rounded correction that completed a cup and handle pattern in March. The breakout into May has started slowly, with the stock trading just three or four points above new support, but this classic pattern may support much higher prices in coming months.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

McDonald’s Cup & Handle Breakout Pattern

Dow component McDonald’s Corp. (MCD) is nearing a critical test at October’s bull market high. The rally would complete the last stage of a multiyear cup and handle breakout pattern, potentially lifting the stock well above 300. Buying interest is building above seven-month lows but price action has a tough chore replacing lost shareholder interest since accumulation indicators topped out in the fourth quarter of 2020.

McDonald’s Real Estate

McDonald’s long-term business objectives aren’t as aggressive as many fast food rivals but the company has harnessed the perfect balance between economically-sensitive sales risk and running a successful real estate enterprise, in which the majority of franchisees leased properties from the hamburger king and now owe monthly payments. There’s little downside in this diabolical calculation, given the bright outlook for world property prices in the new decade.

Deutsche Bank analyst Brian Mullan just upgraded shares, noting “continued momentum in the U.S. business as well as an arguably underappreciated market share opportunity in the IOM segment should lead to upward revisions to consensus EPS, specifically in 2022e and potentially in 2023e as well. In addition, we think that these near-term factors, combined with an attractive long-term global growth outlook, are supportive of MCD holding a ~24 to 25x P/E multiple, for a period of time, throughout an upward earnings revision cycle”.

Wall Street and Technical Outlook

Wall Street consensus has grown more bullish in recent months, yielding an ‘Overweight’ rating based upon 25 ‘Buy’, 2 ‘Overweight’, and 8 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions. Price targets currently range from a low of $209 to a Street-high $273 while the stock is set to open Thursday’s session about $18 under the median $242 target. This modest placement indicates continued uncertainty about international markets.

McDonald’s topped out above 220 in the third quarter of 2019 and turned lower, accelerating to a three-year low during 2020’s pandemic decline. The subsequent recovery wave completed a 100% retracement into the prior high in September, yielding a failed October breakout, followed by a rounded corrective pattern. The stock is now lifting off the 200-day moving average, potentially completing the handle of a multiyear cup and handle breakout pattern.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

McDonald’s Moves Higher Despite Missing Q4 Earnings Estimates

McDonald’s Video 29.01.21.

Pandemic Restrictions Continue To Put Pressure On McDonald’s Earnings

Shares of McDonald‘s are gaining ground today despite the disappointing earnings report. In the fourth-quarter, the company recorded revenue of $5.31 billion and adjusted earnings of $1.70 per share, missing analyst estimates on both earnings and revenue.

McDonald’s stated that global comparable sales declined by 1.3% but improved compared to the previous quarter. For the full year, global comparable sales declined by 7.7% due to the negative impact of the coronavirus pandemic.

In the U.S., fourth-quarter comparable sales increased by 5.5% while they remained under pressure in the international segment.

The company will continue to invest in delivery and digital presence as these segments showed significant strength during the pandemic. At this point, it looks like investors are buying the story as the stock is gaining ground despite the disappointing earnings report at a time when S&P 500 is under pressure.

Investors Look Ready To Focus On The Future

While the beginning of mass vaccination program was challenging in most countries which have access to vaccines, investors are still ready to bet that the world will soon get back closer to its normal state.

Meanwhile, McDonald’s managed to quickly adapt to the new realities when in-door dining may be restricted in various countries, and investors believe that current investments in delivery and digital space will pay off in the future.

Currently, McDonald’s is trading at about 25 forward P/E which looks like a reasonable valuation for the current market environment when the company’s valuations are boosted by the unprecedented support provided by the world governments and central banks.

Another round of U.S. stimulus may provide additional support to McDonald’s in the first half of this year as it will certainly boost consumer activity. While the timing and the size of the new package is not clear as Biden’s stimulus plan is facing opposition from Republicans, some stimulus will likely be delivered in the upcoming months which will be bullish for consumer-dependent businesses like McDonald’s.

For a look at all of today’s economic events, check out our economic calendar.

Stock Pick Update: Jan. 27 – Feb. 2, 2021

In the last five trading days (January 20 – January 26) the broad stock market has extended its long-term uptrend. The S&P 500 index reached new record high of 3,870.90 yesterday, as investors awaited big-tech quarterly earnings releases. The S&P 500 has gained 0.88% between January 20 open and January 26 close.

In the same period of time our five long and five short stock picks have lost 4.22%. Stock picks were relatively much weaker than the broad stock market’s performance last week. Our long stock picks have lost 6.12% and short stock picks have resulted in a loss of 2.32%. The Energy sector has been the strongest in the previous month, but last week there have been significant declines in oil stocks. Hence that relatively big drawdown of our portfolio.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

Our last week’s portfolio result:

Long Picks (January 20 open – January 26 close % change): COP (-10.11%), PXD (-8.09%), C (-9.59%), SPGI (+0.42%), APD (-3.25%)
Short Picks (January 20 open – January 26 close % change): WBA (+2.56%), MNST (-1.48%), SPG (+7.28%), EQR (+3.85%), TTWO (-0.62%)

Average long result: -6.12%, average short result: -2.32%
Total profit (average): -4.22%

Stock Pick Update performance chart since Nov 18, 2020:

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, January 27 – Tuesday, February 2 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (January 27) and sold or bought back on the closing of the next Tuesday’s trading session (February 2).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .

Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:

  • buys: 2 x Consumer Discretionary, 2 x Energy, 1 x Health Care
  • sells: 2 x Industrials, 2 x Consumer Staples, 1 x Materials

Buy Candidates

MCD McDonalds Corp. – Consumer Discretionary

  • Stock may break above two-month-long downward trend line
  • The resistance level is at $217.50 and support level is at $207.50

ORLY O’Reilly Automotive, Inc. – Consumer Discretionary

  • Possible upward reversal following the recent correction
  • The resistance level is at $465 – short-term upside profit target level

WMB Williams Cos., Inc. – Energy

  • Stock trades within a consolidation following downward correction – uptrend continuation play
  • The support level is at $20.75 and resistance level is at $22.75

Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Consumer Discretionary and Energy sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today .

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Biden’s Presidency from a Market Perspective

Chief Market Analyst of XTB group discusses Biden’s presidency from a market perspective.

Watch this video to learn:

  • Key themes of Joe Biden’s presidency
  • Chances and risks for the markets
  • Present market situation on indices, fx and commodities
  • Key calendar positions for this week

Other top news this week include:

Earnings to Watch Next Week: Microsoft, Apple, Tesla and Facebook in Focus

Earnings Calendar For The Week Of January 25

Monday (January 25)

IN THE SPOTLIGHT: KIMBERLY-CLARK

Kimberly-Clark, an American multinational personal care corporation, is expected to report a profit of $1.62 in the fourth quarter of 2020, which represents a year-over-year decline of about 5.2% from the same quarter a year ago when the company reported $1.71 cents per share.

However, Wall Street forecasts the company’s revenue to grow over 3% to $4.7 from the same period year ago. For full-year 2020, revenue is expected to be at $19.1 billion.

“We maintain our Buy-rating and above-consensus EPS estimate into KMB’s 4Q report BMO on Monday. Kimberly Clark’s (KMB) shares have lagged staples as the market remains concerned about moderating POS trends in Dec/Jan and commodities; however, we see an upside to Street 4Q20 and ’21/’22 ests. w/commodity inflation reasonably reflected at current spots and view the bar as low into the print w/KMB trading at 16x P/E (30% discount to HPC peers vs. 20% hist. avg.),” noted Kevin Grundy, equity analyst at Jefferies, who rated the paper products giant “Buy” and set the price target at $152.

Florida-based insurance broker Brown & Brown will post earnings of $0.29 per share for last quarter of 2020.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 25

Ticker Company EPS Forecast
CBU Community Bank System $0.76
BOH Bank of Hawaii $1.11
PHG Koninklijke Philips $1.04
KMB Kimberly Clark $1.62
WSFS Wsfs Financial $0.91
AUY Yamana Gold USA $0.11
CR Crane $1.10
HXL Hexcel -$0.20
BXS BancorpSouth $0.62
JJSF J&J Snack Foods $0.26
SFBS ServisFirst Bancshares $0.81
BRO Brown & Brown $0.29
GGG Graco $0.51
AGNC American Capital Agency $0.65
STLD Steel Dynamics $0.76
FUL HB Fuller $0.85
ACKAY Arcelik ADR $0.61
ASH Ashland $0.44
ELS Equity Lifestyle Properties $0.33
BKRKY Bank Rakyat $0.17

Tuesday (January 26)

IN THE SPOTLIGHT: MICROSOFT

MICROSOFT: The global technology giant is expected to report a profit of $1.64 in the fiscal second quarter, which represents year-over-year growth of about 8.6% from the same quarter last year when the company reported $1.51 per share.

The world’s largest software maker’s revenue is forecasts come at $40.23, up from the $36.91 billion reported the same quarter a year earlier.

“Q2 results likely highlight the durability of Microsoft‘s commercial businesses and conservatism in forward consensus expectations. After clearing tough Q2 product cycle comps and lingering COVID-19 impacts, strong secular positioning and an attractive multiple make Microsoft (MSFT) a top stock for the recovery,” said Keith Weiss, equity analyst at Morgan Stanley.

“At 26x CY22e GAAP EPS, MSFT trades at a premium to the S&P, warranted due to MSFT‘s premium return profile. Multiple expansion will likely come from gaining comfort in the durability of commercial business gross profit dollars.”

Johnson & Johnson, one of the world’s largest and most comprehensive manufacturers of healthcare products, will post earnings of $1.83 per share for last quarter of 2020.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 26

Ticker Company EPS Forecast
NEE NextEra Energy $0.38
NEP Nextera Energy Partners $0.37
JNJ Johnson & Johnson $1.83
NVS Novartis $1.36
RTX Raytheon Technologies Corp $0.69
GE General Electric $0.09
AXP American Express $1.31
LMT Lockheed Martin $6.42
MMM 3M $2.15
PLD ProLogis $0.39
FCX Freeport-McMoran $0.38
PCAR PACCAR $1.21
ROK Rockwell Automation $1.89
DHI DR Horton $1.68
WAT Waters $2.87
IVZ Invesco $0.57
ALV Autoliv $1.92
PII Polaris Industries $2.90
ALK Alaska Air -$2.86
SNV Synovus Financial $0.81
PPBI Pacific Premier Bancorp $0.56
GATX GATX Corp $0.87
SFNC Simmons First National $0.42
XRX Xerox $0.63
CIT CIT $0.57
ADM Archer-Daniels Midland $1.10
RNST Renasant $0.59
MSFT Microsoft $1.64
TXN Texas Instruments $1.34
SBUX Starbucks $0.56
AMD Advanced Micro Devices $0.47
CNI Canadian National Railway USA $1.42
COF Capital One Financial $2.80
MXIM Maxim Integrated Products $0.68
VAR Varian Medical Systems $1.05
BXP Boston Properties $0.60
CHRW C.H. Robinson Worldwide $0.97
FFIV F5 Networks $2.44
WRB W.R. Berkley $0.79
EHC Encompass Health Corp $0.85
RNR Renaissancere -$1.92
SLGN Silgan $0.53
UMBF UMB Financial $1.32
NAVI Navient $0.83
WSBC WesBanco $0.61
FMBI First Midwest Bancorp $0.26
RXN Rexnord $0.38
EBAY eBay $0.84
HOG Harley Davidson $0.10

Wednesday (January 27)

IN THE SPOTLIGHT: APPLE, TESLA, FACEBOOK

APPLE: The consumer electronics giant is expected to report profit growth of more than 12% of $1.41 in the fiscal first quarter of 2021 on sales of $102.61 billion, highlighted growth of over 11% from the year-ago quarter. That growth is largely driven by a strong demand iPhone handset, Mac computers, iPad tablets and wearables in the holiday season.

“Our December quarter revenue of $108.2B is 5% above consensus, while our EPS of $1.50 is 7% above consensus. We expect demand strength to continue and our FY21 revenue and EPS estimates are both 5% above consensus,” wrote Katy Huberty, equity analyst at Morgan Stanley.

“Given positioning into the quarter is muted after the rotation out of high-quality stocks over the past several months, we expect strong follow-through post-earnings and are buyers into the print. We also raise our price target to $152, from $144, as we mark our price target to market accounting for recent peer multiple expansion.”

TESLA: The California-based electric vehicle and clean energy company is expected to report a profit of $1.04 in the fourth quarter of 2020, posting a profit for the sixth straight quarter. The manufacturer of high-performance electric vehicles’ revenue is forecast to surge about 35% to $10 billion.

“A double-fly-wheel. We believe Tesla can leverage its cost leadership in EVs to aggressively expand its user base, over time generating a higher % of revenue from recurring/high-margin services revenue. Services drive the upside. We forecast Tesla’s (TSLA) network services EBITDA as a % of total TSLA EBITDA to reach 11% by 2025, 19% by 2030 and 37% by 2040. Tesla Service revenue includes automated driving, infotainment, upgrades, supercharging, maintenance, telematics, etc.,” said Adam Jonas, equity analyst at Morgan Stanley.

“Valuation supportive vs. tech. Including Network Services, Energy & Insurance to our core auto forecasts, at $810 Tesla trades at 25x EV/EBITDA in 2025 and 5x 2025 sales. Expensive vs. auto but not vs. software/tech comps.”

FACEBOOK: The world’s largest online social network is expected to report a profit of $3.16 in the fourth quarter of 2020, which represents year-over-year growth of 23.4% from the same quarter a year ago when the company reported $2.56 cents per share.

According to the Zacks Research, the social media conglomerate’s revenue will increase of 24.7% to $26.29 billion from the year-ago, largely driven by solid ad-revenue growth amid advertiser demand during the holiday period.

“Monetization Potential: We are positive on FB‘s monetization roll-out of Instagram as well as FB’s ability to continue to innovate and improve its monetization (Canvas Ads, Dynamic Ads, video). Combined with the high and growing engagement we see monetization upside going forward,” noted Brian Nowak, equity analyst at Morgan Stanley.

“Investing from Position of Strength to Drive Faster Long-Term Growth: We are modeling 29% GAAP opex (excl. one-time items) growth in 2021, implying an incremental $15bn in opex. Our base case model implies opex per employee moderates in ’21 while FB hiring remains roughly flat on an absolute basis. We believe FB will grow EPS at a 28% CAGR (2019-2022).”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 27

Ticker Company EPS Forecast
ANTM Anthem $2.53
GIB CGI Group USA $0.97
VFC VF $0.90
TDY Teledyne Technologies $3.05
KNX Knight Transportation $0.91
PB Prosperity Bancshares $1.35
OSK Oshkosh $0.73
NYCB New York Community Bancorp $0.26
CVLT Commvault Systems $0.47
EAT Brinker International $0.35
T AT&T $0.73
ABT Abbott $1.35
BA Boeing -$1.60
ADP ADP $1.29
NSC Norfolk Southern $2.49
PGR Progressive $1.64
GD General Dynamics $3.54
BX Blackstone $0.90
TEL TE Connectivity $1.28
APH Amphenol $1.02
GLW Corning $0.48
NDAQ Nasdaq Omx $1.46
MKTX MarketAxess $1.81
HES Hess -$0.65
ROL Rollins $0.11
TXT Textron $0.90
SEIC SEI Investments $0.78
PTC PTC $0.66
TTEK Tetra Tech $0.81
CACI Caci International $3.59
LSTR Landstar System $1.72
SLM SLM $0.36
RLI RLI $0.66
SLG SL Green Realty -$0.27
AXS Axis Capital -$0.28
AVT Avnet $0.39
CNS Cohen & Steers $0.68
CNMD CONMED $0.77
MTH Meritage Homes $3.33
CATY Cathay General Bancorp $0.76
ISBC Investors Bancorp $0.27
CALX Calix $0.33
CP Canadian Pacific Railway USA $5.03
AMP Ameriprise Financial $4.52
AAPL Apple $1.41
TSLA Tesla $1.04
FB Facebook $3.16
NOW ServiceNow $1.06
SYK Stryker $2.55
LRCX Lam Research $5.69
CCI Crown Castle International $0.62
EW Edwards Lifesciences $0.53
LVS Las Vegas Sands -$0.29
TER Teradyne $1.00
HOLX Hologic $2.17
URI United Rentals $4.26
DRE Duke Realty $0.16
RJF Raymond James Financial $1.65
PKG Packaging Of America $1.48
WHR Whirlpool $6.00
MKSI MKS Instruments $2.01
AZPN Aspen Technology $1.17
CREE Cree -$0.25
LPL Lg Display $0.19
CVBF CVB Financial $0.34
XLNX Xilinx $0.69
UMC United Microelectronics $0.08

Thursday (January 28)

IN THE SPOTLIGHT: Mastercard, McDonald’s, Visa

Mastercard Inc, a leader in global payments and a technology company, will post earnings of $1.53 per share for last quarter of 2020, which represents a year-over-year decline of about 22% from the same quarter a year ago when the company reported $1.96 cents per share.

McDonald’s Corporation, one of the world’s largest American fast-food chain, will post earnings of $1.79 per share for last quarter of 2020. Visa Inc is also expected to report first-quarter earnings on the same day, with earnings of $1.28 per share for the quarter.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 28

Ticker Company EPS Forecast
MKC McCormick $0.81
LEA Lear $3.40
FCFS FirstCash $0.82
VLO Valero Energy -$1.28
LUV Southwest Airlines -$1.66
AAL American Airlines -$4.12
NUE Nucor $1.16
MSCI Msci $1.92
JBLU JetBlue Airways -$1.67
FRME First Merchants $0.66
MA Mastercard $1.53
CMCSA Comcast $0.48
ATI Allegheny Technologies -$0.35
ABMD Abiomed $1.12
ADS Alliance Data Systems $2.44
TROW T. Rowe Price $2.64
MCD McDonalds $1.79
STM Stmicroelectronics $0.54
DHR Danaher $1.87
DOW Dow Chemical $0.64
CNX Consol Energy $0.16
SHW Sherwin-Williams $4.84
KEX Kirby $0.24
MO Altria $1.01
NTCT Netscout Systems $0.52
CFR Cullen/Frost Bankers $1.28
PNR Pentair Ordinary Share $0.63
TSCO Tractor Supply $1.47
PHM PulteGroup $1.39
EWBC East West Bancorp $1.01
RCI Rogers Communications USA $0.72
NOC Northrop Grumman $5.77
SWK Stanley Black & Decker $2.99
AIT Applied Industrial Technologies $0.74
BPOP Popular, Inc. $1.62
AOS A.O. Smith $0.58
XEL Xcel Energy $0.55
FLWS 1-800-Flowers $1.38
EXP Eagle Materials $1.74
MMC Marsh & McLennan Companies $1.13
COLB Columbia Banking System $0.60
BC Brunswick $1.02
FLEX Flextronics International $0.37
WRK WESTROCK $0.54
MTSI MACOM Technology Solutions $0.37
VLY Valley National Bancorp $0.25
PEXNY PTT Exploration & Production $0.01
DOV Dover $1.38
DLB Dolby Laboratories $0.34
FFBC First Financial Bancorp $0.45
HTH Hilltop $1.13
NATI National Instruments $0.13
RMD ResMed $1.25
GBCI Glacier Bancorp $0.74
ABCB Ameris Bancorp $1.16
CE Celanese $1.69
FIBK First Interstate BancSystem $0.80
JNPR Juniper Networks $0.53
SIGI Selective $1.20
V Visa $1.28
WDC Western Digital $0.52
EGHT 8X8 -$0.03
X United States Steel -$0.62
FHI Federated Hermes Inc $0.78
AJG Arthur J. Gallagher $0.78
SWKS Skyworks Solutions $2.08
OLN Olin -$0.11
MDLZ Mondelez International $0.66
PFG Principal Financial $1.42
EMN Eastman Chemical $1.50
ORI Old Republic International $0.43
FICO Fair Isaac $2.35
MSTR Microstrategy $1.62
RHI Robert Half International $0.68
LANC Lancaster Colony $1.57
RDN Radian $0.60
CAJ Canon $0.31
TOELY Tokyo Electron Ltd PK $0.78
HOCPY Hoya Corp $0.84
DGE Diageo £80.90
KPELY Keppel Corporation -$0.05
NVR NVR $78.78
FFIN First Financial Bankshares $0.37

Friday (January 29)

Ticker Company EPS Forecast
PSXP Phillips 66 Partners $0.89
JCI Johnson Controls $0.40
AN AutoNation $2.05
HON Honeywell International $2.00
MSGS Madison Square Garden Sports -$1.63
ATLCY Atlas Copco ADR $0.39
SAP SAP $1.95
LLY Eli Lilly $2.37
CHD Church Dwight $0.52
LHX L3Harris Technologies Inc $3.09
CL Colgate-Palmolive $0.76
BAH Booz Allen Hamilton $0.93
BBVA Banco Bilbaoizcaya Argentaria $0.13
ERIC Ericsson $0.20
RDY Drreddys Laboratories $0.58
CVX Chevron $0.07
SYF Synchrony Financial $0.89
CAT Caterpillar $1.48
CHTR Charter Communications $4.82
PSX Phillips 66 -$0.81
BMI Badger Meter $0.43
GNTX Gentex $0.50
ROP Roper Industries $3.49
WY Weyerhaeuser $0.42
LYB LyondellBasell Industries $1.36
ROLL Rbc Bearings $0.82
FBP First Bancorp FBP $0.18
KKR KKR & Co LP $0.41
HMC Honda Motor $0.89
GCTAY Siemens Gamesa ADR $0.02
NNIT Nnit A/S kr1.62
SPG Simon Property Group $0.85
ASEKY Aisin Seiki Co $1.19
ALNPY ANA Holdings ADR -$0.35
KMTUY Komatsu $0.26
TTM Tata Motors $0.17
TOTDY Toto $0.46

 

Three Top Restaurant Plays for 2021

National and international fast food chains have entered 2021 in a commanding position to recoup the balance of losses posted in 2020. More importantly, they’re likely to grow market share well above prior highs because tens of thousands of smaller operators have been forced out of business as a result of lockdowns and social distancing. It could take years for a new wave of restaurateurs to obtain financing, given the credit damage caused by bankruptcy filings.

Three top restaurant plays for 2021 offer few unexpected opportunities because they’re all household names that have survived and prospered during the pandemic. These big cap players have also established new delivery channels and expanded drive-through facilities in the last year, putting them in perfect positions to pick up the slack left by the departure of your favorite rib joints and greasy spoons.

McDonald’s

Dow component McDonald’s Corp. (MCD) entered a steep correction in the fourth quarter of 2019 and fell to a three-year low in March 2020. The stock completed a round trip into the prior high and broke out in October but the rally failed, yielding mixed action into January. Price action settled on the 200-day moving average in December and has held that level, raising odds it will soon enter a breakout run, possibly fueled by declining infection rates in the United States.

Chipotle Mexican Grill

 Chipotle Mexican Grill (CMG) isn’t well-known in parts of the world but it’s now the second highest-capitalized restaurant chain, behind Mickey D. The burrito purveyor has posted better-than-expected numbers throughout the pandemic and now offers delivery, after resisting that revenue source for years. The stock broke out to an all-time high in December, after a three-month consolidation, and could post outstanding returns for investors in 2021.

Yum China

 Yum China Holdings Inc. (YUMC), Shanghai-based purveyor of KFC, Taco Bell, and Pizza Hut, was spun off from Yum! Brands Inc. (YUM) in November 2016. It’s now a $22 billion operation that’s outperforming the parent, breaking out to a new high in June when China emerged from the COVID-19 pandemic. The stock has continued to post new highs since that time, culminating in Jan. 11’s all-time high at 61.18.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Top Blue Chip Picks for 2021

2020 has shaped up as an excellent year but it’s time to move on and think about 2021. Market leaders in one year often underperform in the following year as investors close out top performers and seek lower risk opportunities. These plays often come with stocks that have posted meager returns but are well-positioned for breakouts and sustained uptrends. Let’s look at three blue chip stocks that meet these criteria in an attempt to get a leg up on the competition.

COVID-19 recovery plays are sitting at the top of this list for obvious reasons but lesser known opportunities are developing as well. The broad market also ignored defensive and household plays through most of the year, instead chasing the hottest momentum stocks, initial public offerings, and special purpose acquisition companies (SPACs). These laggards could shine in 2021 because perennially strong performers rarely have two ‘off years’ in a row.

Visa

Dow component Visa Inc. (V) has benefited from the accelerated shift into digital payments triggered by the pandemic and is viewed as a major beneficiary. However, the company depends on payment volume to book profits, exposing price action to broad economic forces. It’s gained about 12% year-to date but has been stuck at the February high for more than three months. Fortunately, price action is now grinding through the last stages of a breakout pattern.

Pepsico

Pepsico Inc. (PEP) rose 23% in 2019 but has struggled in 2020, posting a mediocre 7% return despite an impressive 2.78% annual dividend yield. That’s still a big deal for non-U.S. traders because contracts for difference (CFDs) pay out dividends, just like shares. The stock rallied back to the February 2020 high above 147 in November and has now completed the last stage of a cup and handle pattern that will generate a measured move target in the 190s after a breakout.

McDonald’s

Dow component McDonald’s Corp. (MCD) topped out in August 2019, well before the pandemic hit world headlines. It failed a breakout above 2019 resistance in October 2020 and turned sharply lower, slumping to a three-month low. The stock has posted a meager 8% year-to-date return but that should improve in 2021, with the pandemic running its course and a bullish 18-month pattern that could complete a breakout in the first quarter.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

McDonalds Bullish Reversal at 50% Fib of Wave 4

McDonalds (MCD) stocks has made a bullish reverse at the 50% Fibonacci retracement level. Does this indicate the end of the retracement and restart of the uptrend? The next earnings date is on 4 February 2021.

Price Charts and Technical Analysis

McDonalds stock 18.12.2020 daily chart

MCD seems to have completed a wave 4 (pink) pattern. This remains valid as long as price stays above the top of wave 1 (blue box). A break below it invalidates (red circle) our wave outlook.

A bullish breakout, on the other hand, confirms our bullish view. A wave 5 pattern could emerge above the resistance zone.

The main targets for upside are the -27.2% Fib at $246 and -61.8% Fib target at $264.

On the 1 hour chart, we see a first hint of a bullish reversal: the price action completed a 5 wave (orange) pattern. This seems to complete a wave 1 (grey).

  • A bearish breakout could indicate a deeper retracement towards the Fibonacci retracement levels. They are expected to create a bounce or reversal.
  • Only a break below the bottom and 100% Fibonacci level indicates an invalidation (red circle).
  • A bullish breakout could indicate a new uptrend again.
  • After the break, price action should make a bull flag to avoid any false breakouts

McDonald's stock 18.12.2020 1 hour chart

For a look at all of today’s economic events, check out our economic calendar.

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

 

Yum! Brands Hits 52-Week High After Upgrade

Yum! Brands Inc. (YUM) is trading at a 52-week high in the first hour of Thursday’s U.S. session after Wells Fargo upgraded the stock. The holding company for Pizza Hut, Taco Bell, and KFC has suffered through a wild 2020, dumping to a four-year low in March and recouping 100% of those losses into November. However, it hasn’t recovered as quickly as rival McDonald’s Corp (MCD) and is still trading below September 2019’s all-time high near 120.

Pizza Hut Growth Stalls

Buying interest has also lagged Mickey D., with Pizza Hut’s U.S. growth stalling a few years ago due to massive competition for the popular fast food. The pandemic has stoked strong 2020 sales due to the explosion of delivery services but most analysts believe it won’t be sustainable. Meanwhile, Taco Bell and KFC are firing on all cylinders, posting sustained multiyear growth that defies the advice of nutritionists, professors, and other folks who care about our health.

Wells Fargo analyst Jon Tower upgraded Yum! to ‘Overweight’ on Thursday, noting “Coming out of a year unlike any other in modern history for the restaurant industry, we expect chains to benefit from pent-up demand and a consumer who is flush with cash to spend. We think this dynamic sets up particularly well for the casual dining space, with this sub-segment likely to see outsized benefits from independent closures, better in-store operating models, more efficient marketing spend, and a viable newer long-term sales channel”.

Wall Street and Technical Outlook

Wall Street consensus is mixed after a turbulent year, with a ‘Moderate Buy’ rating based upon 5 ‘Buy’, 6 ‘Hold’, and 0 ‘Sell’ recommendations.  Price targets currently range from a low of $97 to a Street-high $125 while the stock has opened Wednesday’s U.S. session just above the median $108 target. Additional upgrades or positive commentary between now and the Feb. 4 earnings report could power a rally into the Street-high.

Yum! Brands has nearly filled the October 2019 gap between 103 and 110. The first sustained uptick above that hole will be highly bullish, raising odds the stock will cover the distance up to August 2019’s all-time high at 119.72. However, accumulation readings are stuck at lower levels and a breakout will set off a bearish divergence, raising odds for a failure. The most bullish scenario, given this configuration, will be rangebound action that gives new investors time to jump on board.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

McDonald’s Shareholders Hitting The Exits

Dow component McDonald’s Corp. (MCD) posted an all-time high at 231.91 in October and rolled over, slicing through support at the 50-day moving average. Three attempts to remount that barrier have now failed, raising odds for a secondary selling wave that drops the fast food giant another 10% to 20%. Volume readings are supporting this bearish call, with funds departing at a steady pace, dropping accumulation indicators to the lowest lows since September.

Third Quarter Sales Contraction

The stock sold off after Q3 2020 earnings on Nov. 9, despite beating top and bottom-line estimates by healthy margins. The company also declared a $1.29 per-share annual dividend during the release but that didn’t stop an aggressive decline that began with a 5% rally gap. In retrospect, it’s easy to see why shareholders hit the exits because Mickey D. reported a 1.5% year-over-year revenue decline and 2.2% drop in global comparable sales.

Overhead supply from the ‘bull trap’ continues to weigh on price action, inducing market players to sell modest recovery attempts. The second pandemic wave is adding to downside pressure, compounded by new lockdowns and shutdowns. McDonald’s has adjusted to the restrictions through drive-through and delivery options but the virus will continue to weigh on revenue, especially in parts of the world where restrictions are more severe than in the United States.

Wall Street And Technical Outlook

Wall Street has been slow to react to growing headwinds, posting a ‘Strong Buy’ rating based upon 21 ‘Buy’, 6 ‘Hold’, and no ‘Sell’ recommendations. Price targets currently range from a low of $209 to a Street-high $265 while the stock closed Friday’s U.S. session just $1 above the low target. This humble placement usually supports higher prices but the reverse may be true in this case, with analysts asleep at the wheel due to end-of-year strength in other market segments.

McDonald’s failure at the 50-day moving average exposes a trip into the 200-day moving average near 200. That isn’t so bad but the stock has also failed a breakout above the 2019 high at 222, setting off long-term sell signals that favor a breakdown at the round number and downside into the November 2019 low at 187, which also marks a key Fibonacci retracement. Fortunately for bulls, a bounce from that level could complete a major breakout pattern in 2021.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Few US Stocks That Could Brighten Up Your Portfolio

Markets are really quiet recently and that is why we will shift our focus towards the American Stocks, coming in right on time as Axiory have increased their product offering by introducing CFD stocks on MT4. This can significantly help you diversify your portfolio and take advantage of more trading opportunities.

Apple is testing the upper line of the symmetric triangle.

Home Depot locked in the sideways trend, waiting for a breakout.

McDonald’s defending the neckline of the H&S formation.

Netflix aiming for the lower line of the rectangle.

Pfizer with a false bullish breakout.

Prudential enjoying the buy signal after the breakout of the upper line of the triangle.

Tesla testing the lower line of the triangle.

Western Digital with a fresh buy signal coming from the breakout of a major resistance.

Micron Technology enjoying a proper buy signal after making new long-term highs.

For a look at all of today’s economic events, check out our economic calendar.

Investors Lose Appetite for Beyond Meats After COVID-19 Eats Profits

Beyond Meat, Inc. (BYND) shares added to Monday’s losses in extended-hour trading, plunging 22.44% after the plant-based meats company reported quarterly results that fell short of the mark as the pandemic crippled restaurant sales and consumers stockpiled less meat alternative products.

The company reported a Q3 loss of 28 cents a share, with the figure falling well short of analysts’ forecasts of a 5 cent per-share profit. Moreover, the bottom line declined from 6 cents a share in the year-ago quarter. Revenues of $94.4 million also came in below expectations but grew 2.7% on a year-over-year (YoY) basis. The substitute meat producer’s U.S. foodservice segment, which includes restaurants and corporate catering, weighed heavily on the top line, falling 11% as consumers opted to eat at home during the health crisis. However, sales growth of 40.5% in Beyond Meat’s grocery unit helped offset the decline.

“We experienced the full brunt and unpredictability of Covid-19 on our net revenues,” CEO Ethan Brown said in a statement accompanying the earnings call. “Unlike the second quarter, where record retail buying and freezer loading by consumers offset the deterioration of our food service business…the long tail of retail stockpiling by consumers, coupled with continued challenges across the majority of our food service customers, led to [third-quarter] results that were lower than we expected,” he added, per Barron’s.

Through Monday’s close, Beyond Meat stock has a market capitalization of $9.4 billion and trades up a whopping 107.49% on the year. Over the past three months alone, the shares have gained nearly 20%.

Wall Street View

In recent months, the company has copped a barrage of broker downgrades. Analysts have grown increasingly worried about rival players in the sizzling alternative meat space. Look for souring sentiment across the Street to continue after the disappointing Q3 earnings. Also, news that McDonald’s Corp (MCD) has launched a test of its own plant-based burger – the McPlant, could trigger additional re-ratings.

The stock currently receives 3 ‘Buy’ ratings, 1 ‘Overweight’ rating, 10 ‘Hold’ ratings, 2 ‘Underweight’ ratings, and 6 ‘Sell’ ratings. Price targets fluctuate from as high as $178 to as low as $55, with the median target pegged at $136. This represents a 16.5% premium to Monday’s extended hours closing quote at $116.73.

Technical Outlook and Trading Tactics

Since reaching a 52-week high in early October, the share price has retraced back below the 50-day SMA. On Tuesday’s expected weakness, active traders should pay close attention to the $121 level. This is where the stock finds a confluence of support from a multiyear horizontal trendline and the 200-day SMA. A price reversal in this area could trigger a return of bullish sentiment, leading to a retest of last month’s high at $197.50 or even a test of the all-time high (ATH) at $239.71.

McDonalds Could Beat Q3 Earnings Expectations

Dow component McDonalds Corp. (MCD) reports Q3 2020 earnings in Monday’s pre-market, with analysts looking for a profit of $1.90 per-share on $5.36 billion in revenue. If met, earnings-per-share (EPS) would mark an 11% profit decline compared to the same quarter in 2019. The stock sold off 2.5% after posting a Q2 revenue decline of nearly 30% in July but comparative sales surged 4.6% in the third quarter, lifting the fast food icon to an all-time high.

Strong Third Quarter Sales

The stock missed top line estimates in the first and second quarters as a result of pandemic shutdowns but benefited from the summer’s return to normalcy and could easily exceed modest expectations.  However, the dreaded second wave is now underway, with the potential to force millions of folks back into their homes. Even so, the enormous popularity of drive-through, pick-up, and delivery services should keep a floor under profits and revenue until COVID runs its course.

Telsey Advisory Group analyst Bob Derrington raised McDonalds target to $250 last week, noting “same store sales trends accelerated in September to a double-digit increase, yielding its strongest U.S. monthly comps since Sept. 2004, and which carried into early October. While those especially strong September trends were not expected to last, it clearly demonstrated that when its operations, marketing, and product innovation plans are well-aligned, Mickey D is an extremely formidable industry competitor.”

Wall Street And Technical Outlook

Wall Street consensus is highly bullish, with a ‘Strong Buy’ rating based upon 20 ‘Buy’ and 4 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $203 to a Street-high $265 while the stock closed Friday’s U.S. session about $17 below the median $236 target. This placement should yield higher prices if the chain can overcome investor fears about the second wave.

McDonalds topped out at 222 in August 2019 and sold off more than 40% into March’s 3-year low. The subsequent uptick completed a round trip into the prior high in September, yielding a breakout that failed at the end of October. The stock has been trading below the 50-day EMA for the last two weeks, signaling growing fears about the second wave.  This weak sentiment could keep a lid on gains unless the company issues unexpectedly strong Q4 guidance.

For a look at all of today’s economic events, check out our economic calendar.

McDonald’s Probes New High After Twin Upgrades

Dow component McDonald’s Corp. (MCD) is testing September’s all-time high above 225 on Monday after two Wall Street upgrades stoked investor buying interest. Restaurant analysts at Wells Fargo and Bank of America have issued highly bullish commentary in the last few days, pointing out impressive drive-through and off-premises sales as well as improving prospects for a “multiyear run of compounding same store sales and growing profits.”

Restaurant Industry Headwinds

Even so, the fast food king needs to overcome industry headwinds that have kept the majority of restaurant stocks from hitting new highs in 2020. For starters, international sales have lagged as a result of fewer drive-through facilities and a crazy quilt of shutdown rules that have impeded indoor service. In addition, the Northern Hemisphere is now headed into the cold autumn and winter months, raising odds for a second infectious wave and draconian shutdowns.

Bank of America Securities analyst Gregory Francfort raised their McDonald’s target from $220 to $250 on Monday, noting “the quick service segment as a whole has seen greater demand during COVID than pre-COVID as consumers tired of their own cooking and leaned into drive-thru and off-premise for engagement with restaurants. This can be seen in our aggregated BAC credit and debit card data by industry segment which showed limited service sales in August growing at a faster clip than before COVID”.

Wall Street And Technical Outlook

Wall Street consensus has been highly bullish since the second quarter and has now lifted into a ‘Strong Buy’ rating, based upon 16 ‘Buy’ and 5 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions at this time. Price targets currently range from a low of $195 to a street-high $250 while the stock opened Monday’s U.S. session right at the median $225 target. This mid-range placement can support even higher prices unless analyst bias reverses gears over the winter months.

McDonald’s mounted the August 2019 high at 222 in September and pulled back, crisscrossing the contested level several times. This is typical price action, denoting a testing phase that eventually yields a sustained breakout or a reversal that reinforces resistance. Accumulation readings confirm steady buying interest despite deaccelerating price rate of change, raising odds that bulls will ultimately prevail and the stock rallies toward 250.

For a look at all of today’s economic events, check out our economic calendar.

McDonald’s Rallies To All-Time High

Dow component McDonald’s Corp. (MCD) has defied the odds in the struggling restaurant sector this week, breaking out above the August 2019 high and posting an all-time high near 225. The company added to gains on Wednesday morning after Business Insider reported that a promotion featuring rapper and singer Travis Scott has caused a shortage of burger ingredients due to overwhelming demand.

McDonald’s New Marketing Initiatives

McDonald’s has started to broaden marketing innovation at restaurants that have now reopened around the world, in an effort to energize already improving monthly sales trends. Current and planned initiatives include broader appeals to Millennials, Generation Z, and ethnic users by featuring more “unique and flavorful meals, products that include the new Spicy Chicken McNuggets, and increasing the use of celebrity spokespersons”.

Telsey Advisory Group analyst Bob Derington raised his price target from $210 to $230 last week, telling clients “we believe new products and cross promotions could broaden McDonald’s appeal to some typically hard to reach user groups, adding potential upside to our same store sales estimates. And to build on its sales momentum, before year-end we believe McDonald’s will introduce some new Breakfast product news and follow that with its long-awaited new Chicken Sandwich, designed to be more competitive with Chick-fil-A.”

Wall Street And Technical Outlook

Wall Street consensus is solidly bullish, with a ‘Strong Buy’ rating based upon 16 ‘Buy’, 5 ‘Hold’, and no ‘Sell’ recommendations. Price targets currently range from a low of $195 to a street-high $245 while the stock is now trading $6 above the median $218 target and just $21 below the high target. Given this lofty placement, more analysts may need to raise their targets to support additional upside.

The breakout could run into a roadblock in the next few sessions, with accumulation-distribution indicators near resistance levels that triggered large-scale reversals in August 2019 and February 2020. As a result, new investors should maintain tight stop losses until these bearish divergences come off the books. Fortunately for bulls, it will only take two or three higher-than-average buying volume sessions to complete the task and open the door to 250.

For a look at all of today’s economic events, check out our economic calendar.

Middle-Week Screening: Gold Glitters and Shines!

Overview and trends

US stocks rose on Monday as investors looked to major earnings on deck this week and awaited the release of the GOP’s coronavirus stimulus plan. Senate Majority Leader Mitch McConnell finally said that Republicans were ready to present their long-awaited $1 trillion COVID-19 package details, as Democrats remained wary. S&P 500 ended up 0.74%, while Dow Jones Industrial Average was higher 0.44%, and Nasdaq Composite shot up 1.86%.

US stock indices ended down from 0.65% to 1.27% yesterday as investors mulled Senate Republicans’ coronavirus stimulus package and a slew of very surprising earnings reports.

The U.S. republicans continued debating on its fiscal relief plan most of the day. The projected $1 trillion packages will include another round of $1,200 payment checks and additional funds for small-business loans.

A large portion of reporting yesterday companies sadly missed their earnings figures, with most disappointments coming from 3M, McDonald’s and even biotech Pfizer. Oil tumbled through the session, with West Texas Intermediate crude dropping as much as 1.5%, to $41.10 per barrel.

Gold was the leading instrument in the 1st half of trading week. Gold prices took a stratospheric leap last week, jumping from the previous week’s support test at $1800 an ounce to the $1900 level that hasn’t been traded since 2011.

Next day Gold jumped to a record high of $1944 per ounce, driven by an uptick in new U.S. coronavirus cases that have added to economic uncertainty. Shares of Moderna surged after the company said it received an additional $472 million in funding for its COVID-19 vaccine.

Trading ideas

According to a new court filing, multiple California state offices are actively investigating Amazon (AMZN) over worker safety concerns as the coronavirus continues to rage throughout the U.S. An eighth Amazon employee has died of COVID-19, and the virus has spread quickly through clusters of employees at factory floors and warehouses nationwide where social distancing isn’t enforced. Amazon’s own shipping centers have reported outbreaks, including one in the Pocono Mountains and another in Oregon.

The earnings date for Amazon is July 31, an overwhelming majority of high-profile analysts think the numbers will be as stellar as never before. Amazon’s average EPS estimate is $3.6 versus $5.01 it actually earned last quarter. It’s easy to guess that Amazon will beat that number indeed. However, even the bigger question will be how the tech giant is going to address these mounting allegations about poor safety of its employees. It looks like this time around it’s no longer just curiosity.

Global payments processor Visa reports earnings today, on July 29, and it will be more than just one more set of quarterly financial numbers. Investors will get a direct insight into how consumer spending is being affected by the pandemic and an uncertain economy. This quarter revenue for the payments processing giant are expected to drop by roughly 17% to $4.81 billion versus $5.84 billion a year ago. This anticipated drop has a lot to do with lower transaction volume as many stores were closed throughout the quarter. With that said, there is optimism for a potential beat driven by increased digital payment volume as more and more people shopped online.

Indeed, dealing with paper money has now become not only unsafe but also unsanitary. So VISA’s performance will be more or less accurately reflecting the real global consumer spending, and households’ entire propensity to consume, and how efficient the world’s largest central banks’ and governments’ efforts to offset the COVID-19 impact. So fasten your seatbelts!

The Australian dollar has rallied rather significantly on Monday, showing signs of life yet again as the U.S. dollar continues to get hammered against most currencies. Aussie pierced below 1.40 mark, and now this level became its support, rather than resistance level. A couple of times over the past several trading sessions it tried to approach it, but the big return looked invariably spectacular.

So, this level now can be seen as a cemented support for the Australian currency. Its further growth towards 1.35 is highly dependent on the continuation of the gold rally. Australia is the second-largest gold producer in the world with 325 tons per year, right after China. By the way, 2019 was a record year for Australian gold production.

So, the momentum the Australian currency has been gaining lately is not just a coincidence, and if greenback keeps getting softer, and metals keep getting stronger, it would be hard to find a better choice than to take a chance on the Aussie.

One of the less-talked-about but more potent beneficiaries of this year’s gold rally Kinross Gold (KGC) is scheduled to announce Q2 earnings results today, on July 29th, after market close.

The consensus EPS estimate is 13 cents and the consensus revenue estimate is around $1 billion (assuming a 20% growth Year-over-Year). Over the last 2 years, Kinross Gold has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time.

Kinross is gaining from higher production at its two main deposit fields, which already had shown strong momentum in this year’s first quarter. Strong production is likely to have continued in the second quarter. Further, gold prices have been soaring this year making it the most attractive safe-haven asset. Gold prices have gained around 13% in the second quarter — the highest quarterly percentage increase in more than four years.

by Vladimir Rojankovski, Grand Capital Chief Analyst

McDonald’s Q2 Global Sales Slump Nearly 24% as COVID-19 Pandemic Bites; Target Price $209

McDonald’s Corp, one of the world’s largest American fast-food chain, reported that its global sales plunged about 24% in the second quarter as restaurants were closed due to the COVID-19 pandemic, sending its shares down about 2% pre-market.

So far, the deadly virus has infected more than 16.57 million people in 210 countries and killed over 650 thousand, wherein the United States is the worst hit, leading the global foodservice retailer to halt reopening of its U.S. restaurants for 21 days early this month.

The leading global foodservice retailer, McDonald’s has over 36000 restaurants in more than 100 countries around the world, said its second-quarter same-store sales worldwide plunged about 24% and declined nearly 9% in the United States, where it operates more than a third of its restaurants.

The company’s revenue fell 30.5% to $3.76 billion, net income fell 68% to $483.8 million. McDonald’s said about Substantially all restaurants were operating drive-thru, delivery, and/or take-away with a limited menu.

Just after the announcement, McDonald’s shares dipped about 2% to $198.50.

Executive comment

“Our strong drive-thru presence and the investments we’ve made in delivery and digital over the past few years have served us well through these uncertain times,” said chief executive officer Chris Kempczinski said.

“We saw continued improvement in our results throughout the second quarter as markets reopened around the world. We’re confident that the strong foundation we’ve built, combined with the unique advantages of our System, position us well to continue operating successfully during this pandemic and emerge even stronger.”

McDonald’s stock forecast

Twenty-four analysts forecast the average price in 12 months at $209.09 with a high forecast of $230.00 and a low forecast of $178.00. The average price target represents a 3.90% increase from the last price of $201.25. From those 24, 20 analysts rated ‘Buy’, four analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $207 with a high of $255 under a bull scenario and $143 under the worst-case scenario. Evercore ISI raised its target price to $210 from $200; Keybanc raised the price target to $215 from $200 while Independent Research lowered its target price to $190 from $195; rated ‘Hold’.

Several other equity researches have also recently upgraded their stock outlook. BMO raised the target price to $220 from $215, Suntrust Robinson raised the target price to $208 from $195, Jefferies raised it to $220 from $208. Cowen and Company raised it to $210 from $208, Piper Sandler raised the target price to $190 from $170 and Stifel raised it to $182 from $175.

Analyst comment

“Best-in-class asset quality, scale in advertising, other areas = structural advantages. Experience of Future (EOTF) reimages enable digital and delivery sales. MCD spends materially more on reimaging than average peers. ROIC rising, capex to fall, and FCF and return of capital to accelerate post ’19, after accounting for COVID-19 disruption,” noted John Glass, equity analyst at Morgan Stanley.

“Refranchising to 95% mostly complete, with operating margins in the mid-40% range, improved FCF and lower earnings volatility. Defensive stock, both in terms of fundamentals and low stock price volatility; better positioned for uncertain demand environment,” he added.

Stock Pick Update: July 22 – July 28, 2020

The broad stock market has extended its uptrend in the last five trading days (July 15 – July 21). The S&P 500 index broke above its early June local high and it got closer to 3,300 mark. More than three months ago on March 23, the market sold off to new medium-term low of 2,191.86. It was a stunning 35.4% below February 19 record high of 3,393.52. The corona virus and economic slowdown fears have erased more than a third of the broad stock market value. Right now the index is just 4.01% below the record high.

The S&P 500 index has gained 0.97% between July 15 and July 21. In the same period of time our five long and five short stock picks have lost 0.21%. Stock picks were relatively weaker than the broad stock market. Our long stock picks have lost 0.28% and short stock picks have resulted in a loss of 0.14%. However, the overall results remain relatively better than the S&P 500 index over last months.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

This means that our overall stock-picking performance can be summarized on the chart below. The assumptions are: starting with $100k, no leverage used. The data before Dec 24, 2019 comes from our internal tests and data after that can be verified by individual Stock Pick Updates posted on our website.

Below we include statistics and the details of our three recent updates:

  • July 21, 2020
    Long Picks (July 15 open – July 21 close % change): DOW (-1.40%), INTC (+2.83%), MCD (-0.47%), XOM (-0.84%), HST (-1.54%)
    Short Picks (July 15 open – July 21 close % change): COG (+4.57%), VNO (-5.52%), AON (+2.30%), LIN (+1.36%), AAPL (-2.01%)Average long result: -0.28%, average short result: -0.14%
    Total profit (average): -0.21%
  • July 7, 2020
    Long Picks (July 1 open – July 7 close % change): INTC (-2.67%), F (+0.33%), PPG (+2.17%), DTE (-0.35%), AIG (-5.93%)
    Short Picks (July 1 open – July 7 close % change): XEL (+2.00%), BLK (+0.91%), EOG (-5.72%), MSFT (+2.52%), EBAY (+8.14%)Average long result: -1.29%, average short result: -1.57%
    Total profit (average): -1.43%
  • June 30, 2020
    Long Picks (June 24 open – June 30 close % change): WY (+0.36%), CTSH (+3.76%), HIG (-0.57%), BSX (-2.39%), COP (-2.28%)
    Short Picks (June 24 open – June 30 close % change): EW (-1.51%), WMB (0.00%), ETR (-0.27%), CCI (+2.04%), ADBE (-1.07%)Average long result: -0.23%, average short result: +0.16%
    Total profit (average): -0.04%

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, July 22 – Tuesday, July 28 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (July 22) and sold or bought back on the closing of the next Tuesday’s trading session (July 28).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s.

Based on the above, we decided to choose our stock picks for the next week. We will choose our top 3 long and top 3 short candidates using trend-following approach, and top 2 long and top 2 short candidates using contrarian approach:

Trend-following approach:

  • buys: 1 x Materials, 1 x Consumer Discretionary, 1 x Technology
  • sells: 1 x Energy, 1 x Real Estate, 1 x Financials

Contrarian approach (betting against the recent trend):

  • buys: 1 x Energy, 1 x Real Estate
  • sells: 1 x Materials, 1 x Consumer Discretionary

Trend-following approach

Top 3 Buy Candidates

MLM Martin Marietta Materials – Materials

  • Stock broke above the downward trend line
  • Potential medium-term uptrend continuation
  • The resistance level of $230

MCD McDonalds Corp. – Consumer Discretionary

  • Stock broke above month-long downward trend line
  • The resistance level of $200 (short-term upside profit target)
  • The support level remains at $180

INTC Intel Corp. – Technology

  • Stock remains above medium-term upward trend line
  • The resistance level and upside profit target level at $65
  • The support level is at $56-57

Summing up, the above trend-following long stock picks are just a part of our whole Stock Pick Update. The Materials, Consumer Discretionary and Technology sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today.

For a look at all of today’s economic events, check out our economic calendar.

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.