Trading McDonald's After Reaching All-Time High
While the S&P 500 stock market index is down around 17% on the year so far (at the time of writing), shares in McDonald's have bucked the trend recording a new all-time high last week.
The share price has since pulled back from its record high but analysts have taken note. The company continues to face many challenges with inflation, and Covid-19 but is a stock to watch.
Learn how to trade McDonald's shares below.
|Symbol for Invest.MT5 Account:
|Date of Idea:
|15 Nov 2022
|1 - 6 months
|Position Size for Invest.MT5 Account:
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Trading McDonald's Stock Pros and Cons
McDonald's is most likely a stock that needs no introduction. The world’s biggest fast-food retail chain has more than 40,000 restaurants in more than 100 countries. Nearly all food chains have had to increase their pricing due to rising inflation around the world with McDonald’s pricing increasing around 10% over the past year.
However, during the most recent earnings call chief financial officer Ian Borden stated that McDonald's has been increasing its market share despite the rise in its prices. There has been a significant increase in the market share from low-income consumers, as well as high-income consumers who are now more cost-conscious.
The latest earnings report also showed earnings and revenue beating Wall Street estimates with company store sales growing 9.5% around the world. With many consumers facing higher energy and supermarket bills due to inflation, McDonald's is positioned well to attract more consumers.
While the share price recorded a new all-time high at $281.67 on 10 November, there are still some concerns for the future to take note of.
The higher US dollar has been a major headwind for the restaurant chain with the company expecting it to impact its fourth-quarter earnings. Even though international sales have been strong there have been some major challenges in its China operations due to Covid-19 restrictions as well as its closure of stores in Russia.
McDonald's Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a McDonald's stock forecast in the past 3 months, there are currently 20 buy, 4 hold and 0 sell ratings on the stock. The highest price level for a McDonald's stock forecast is $320.00 with the lowest price target at $250.00.
The average price target for a McDonald's stock forecast is $286.08.
An Example Trading Idea for the McDonald's Stock Price
An example trading idea for the McDonald's share price could be as follows:
- Buy the stock on a pullback to $268.00 to allow for current market volatility.
- Target just below the highest analyst price target at $320.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 McDonald's shares:
- If target is reached = $520.00 potential profit ($320.00 - $268.00 *10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering that McDonald's has been moving higher for the past few months.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in McDonald's stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy McDonald's Stock in 4 Steps
With Admirals, you can buy shares in companies like McDonald's with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Click on the banner below to buy McDonald's stock today! ▼▼▼
Do You See the McDonald's Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance McDonald's's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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