3 Stocks I Saw on TV: MCD, CMG, TWTR (January 22, 2016)
MCD CMG TWTR
Here are 3 stocks I that saw on TV that I want to pass on to you. First of all McDonald’s ( NYSE:MCD ). The company reported earnings today; they noted that they are expanding in China. They’ve got higher revenues in the U.S., which is different. And also, and most importantly, they supersized breakfast. Meaning they’re doing it all day as opposed to just during the morning hours (see the movie Big Daddy for more details on that). If you remember this happened a while ago, I don’t remember when it was, but I remember the last time I was on CNBC the stock was trading a little under $100.00. The company announced that they were extending breakfast and I was the bull on the case. There was another guy that was bearish, and he was basically saying, “Look, I don’t really think it matters that much, it’s a desperation move.” And I think he was right about it being a desperation move. I looked at it and thought, “You know what? If it’s a desperate measure it’s a pretty darn smart one. Because there’s a reason they’re doing it, because people are asking for breakfast all day.”
My projection was $110.00 price target. I am not giving you 120.00 or 130.00 or whatever, That’s not what I do. It was a technical level, so lets just say mission accomplished. Now I’m looking at this as a stock that’s probably going to rest a bit. I don’t think it’s going to keep moving higher in the short-term. You can just see it’s been in a volatility squeeze, It’s had a HECK of a move and it’s just due for a pullback. I have no idea whether the stock will ultimately move higher from here. For cryin’ out loud they sell, I’ll say it, they sell junk food, they sell fast food. I know they have some salads in there and I’ve seen some apples, but that’s what it is, you’re not getting really, really super healthy food there and that’s only going to last so long. The bottom line is, as far as the Dow goes, this was one of those stocks that was AMAZING last year when it was close to or at an all-time high when so many other stocks were tailing off. So don’t give up on McDonald’s ( NYSE:MCD ). I would just say, let the stock settle in a bit before you buy it.
Now, Chipotle ( NYSE:CMG ) was on the other side of this deal. A couple of the guys were talking about this on the Fast Money: Halftime Report, called Debate It, about Chipotle ( NYSE:CMG ), comparing it to McDonald’s ( NYSE:MCD ). Okay, it’s more expensive than McDonald’s ( NYSE:MCD ) as far as P/E and all that. Okay, I get it. The big question here is, is the E.Coli scare all factored in? Now we don’t know for sure because we don’t know the extent of that, whether we’re going to have another outbreak of that. But I know this, they report earnings in a week, February 2nd. You’re going to see this stock make a BIG jump one way or another on that. On a weekly chart this thing is really, really, scarily oversold, but it is still in a nasty downtrend. So I’m going to tell you this, if you’re interested in taking this stock one way to do it is to buy a small amount just before earnings. The reason I say a small amount is this, if the news is good, because this stock has already been discounted almost 50 percent; you will see that small position that you have gain a lot in value very quickly. You’re going to be glad you bought some. On the other hand, if you see the stock trade down because it just trades down, you’re going to be glad you bought just a little bit. AND, probably that post-earnings selloff will then mark the bottom, like just kind of a crescendo of selling. Anyway, that’s the way I would trade Chipotle ( NYSE:CMG ). OR, you could do what I’m planning on doing, is just watching all of you do what I just described. Because me, that’s just not my game, I don’t trade stocks over earnings.
Okay, Twitter ( NYSE:TWTR ). It turns out a bunch of executives are leaving now (Dude, it’s about time). February 2nd is when this company reports earnings. The stock has been in a downtrend. It seems like every week is a new opportunity to get closer to support, which is now $17.21 below where it is right now. Here’s the real deal, 15.50 is support. It’s a downtrending stock, so this is a countertrend trade. You can be long this stock as long as it stays above this level. If it does not remain above this 15.50 level then you don’t want to be long this stock. Just because a stock is oversold, it has this little bounce, you saw this same kind of thing here. “Oh, now the stock’s done going down and we’re moving up.” And that didn’t really happen. You could say similar things here. My whole point is this, 15.50, that is your line in the sand. If the stock falls below there you don’t want to be long it.
3 Stocks I Saw on TV Free Chart