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McDonald's Corporation (MCD)

McDonald's stock forecast: buy or sell

Close on Oct 23rd, 2020
$228.71 -0.19%
3 months performance
15.80%
Published: October 25th, 2020 - 5.20pm EDT

McDonald's stock outlook

  • McDonald's closed on Friday at $228.71 after slightly moving a -0.19% and broke a streak of 3 sessions in red.
  • On Tuesday broke out above its latest top at $226.72
  • Price is drawing a scaled uptrend since last March with higher tops and higher bottoms. Up to date, shares marked a 86.41% profit since the beginning of this rally. On Tuesday McDonald's broke out above $226.72 giving an entry point
  • McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products and beverages, as well as breakfast menu.

Important note:
The thoughts contained in this post are personal and should not be followed as recommendations for you to buy or sell shares. The author of this article does not have an understanding of the specific circumstances of the reader, his or her own finances or what is in his or her best interest at any given time. All users should speak with their financial advisor before buying or selling any securities Thoughts are published for informational motives only

McDonald's stock charts

Should I buy McDonald's stock?

All successful traders recommend adhering to a trading strategy and not make decisions based on subjective opinions, rumors or feelings. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is $MCD stock a buy?

Currently, McDonald's stock matches one trading strategy:

Uptrend buy setup

McDonald's stock continues to trend higher since last March and marked a gorgeous 86.41% gain. Price marked a pull back in this uptrend at $213.40 in mid-September, and since then it bounced off a 7.17%. Price just broke out above the entry point at $226.72, but it's still eligible. If price climbs beyond $238.06, don't chase the price and wait for another opportunity. If you decide to enter this trade, the suggested stop loss is at $207.00

Buy setupBuy pointStop lossRisk
Uptrend buy setup$226.72$207.008.7%

Should I sell McDonald's stock?

How to know when is it time to sell McDonald's stock?. In the same way as when we have to buy shares, determining when is the best time to sell is not a haphazard decision, and we must follow our own trading strategy. When selling, as well as buying, our strategies are very easy to use and are only valid for selling stocks in your porfolio, not for selling short McDonald's stock

A golden rule is that you should never mantain a trading operation that results in losses greater than those expected by the time of the buy. The timing to sell shares always has to be dictated by the stop-loss (automatic or manual)

Is it time to sell McDonald's stock?

Currently, McDonald's stock doesn't match any of our preferred sell setups, so if you own McDonald's stock and your operation is in profit probably is not time to sell now

Analysts' recommendations to buy or sell McDonald's stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last 30 days, 9 analyst ratings were published for McDonald's. General sentiment is bullish, with 8 out of 9 posting optimistic forecasts

McDonald's ratings

Brokerage firmRating
Oct 1st, 2020
Wells Fargo & Company BuyBuy
Oct 5th, 2020
Bank of America Strong buy
Oct 5th, 2020
BofA Securities Strong buy
Oct 9th, 2020
BMO Capital Markets Buy
Oct 9th, 2020
BTIG Research BuyStrong buy
Oct 9th, 2020
Jefferies Financial Group Strong buy
Oct 9th, 2020
Truist Neutral
Oct 14th, 2020
Morgan Stanley Buy
Oct 20th, 2020
JPMorgan Chase & Co. Buy

Technical analysis

Since last March, McDonald's has been drawing an uptrend that so far marked a gorgeous 86.41%. During this uptrend, the price gave some entry points on the breakouts. Latest low was in mid-September, when price bounced at $213.40. On Tuesday, McDonald's broke out above its last top ($226.72) giving a good buying opportunity

SMAs overview

Moving averages are simple tools for traders to gauge stock momentum. A moving average is the average price of a stock over a set period of time. Moving averages are usually calculated on different periods depending on the trading timeframe 21, 50, 100 and 200 days are the most usual moving averages. Further about Moving Averages from sources like Wikipedia and Investopedia

MCD SMAs chart

Supports and resistances

Investors use supports and resistances to find price points on a chart that may work as obstacles, containing the price of a stock to move in certain direction. A support level is a level where the price may stop as it falls. This means that the price is more likely to "rebound" this level rather than break through it. However, if the price breaks down this level, it is likely to continue descending until approaching another support level. On the other side, a resistance level is where the price may find opposition as it rises. In the same way, the price is more liable to "bounce off" at this level, and if it finally crosses this level, the price will rally easily until it finds the next resistance

Price is at highs and there are not upper resistance levels.

The current supports are:

  • S1: $226.72 (-0.87% below)
  • S2: $215.36 (-5.84% below)
  • S3: $215.29 (-5.87% below)
  • Bollinger bands

    So-called Bollinger bands are a well-established technique developed by John Bollinger. Basically, the Bollinger Bands are lines that run around a centralmoving averagediffering in distance from the bottom to the top depending on market volatility. They are usually drawn by an offset of two standard deviations, above and below, from a moving average line. Bollinger himself recommends the moving average period to be 20

    The price is trading near to the upper Bollinger band, indicating some level of overbought in recent sessions. This is not a sell point, as price can move in these levels for many days and weeks

    MCD RSI chart

    Relative strength index

    The relative strength index (RSI) is a technical indicator used in the analysis of stock markets. It is intended to chart the current and past strength or weakness of a stock or market based on the closing prices of a recent trading period. Like other oscillation indicators, the RSI fluctuates in a range between 0 and 100. J. Welles Wilder introduced the relative strength indicator in 1978 and since then it has been widely used by stock traders

    The RSI dropped below the overbought level of 70 on October 16 after just crossing to the overbough zone for just one day (weak signal). The RSI reading on Friday was 63.3. Since RSI lost the overbought zone, McDonald's stock merely changed a 0.4%

    MCD RSI chart

    Earnings and financials

    McDonald's ($MCD) hosted the shareholders call and released the fiscal 2nd-quarter report in late July. The company posted adjusted EPS that undercut analysts' expectations. Quarterly EPS was $0.66 per share instead of $0.75.

    Compared to the same quarter last year, EPS was $2.05, so reported EPS means a loss of -67.8%.

    McDonald's ($MCD) will host the Q3 earnings call on early next November. Market forecasts a per-share earnings of $1.81, compared to Q2 that made $0.66.

    MCD revenues and profits chart