This week, the Alpha Algorithm revisits a 10-strategy stock known throughout the world for its “Golden Arches,” McDonald’s Corporation (MCD).
You’ve already profited from McDonald’s this year when you were stopped out on Nov. 10 at $165.05 for a 16.30% gain. Founded in 1940 and based in Oak Brook, Illinois, McDonald’s Corporation (MCD) operates and franchises McDonald’s across the globe. At the close of 2016, it operated 36,899 restaurants, including 31,230 franchised restaurants and 5,669 company-operated restaurants.
McDonald’s versus the S&P 500 Year to Date
10 Top Investment Strategies Betting on McDonald’s Corp. (MCD)
- Insider Buying
The company’s outstanding shares have been reduced by at least 5% in the previous year through share repurchases.
- Fundamental Strength
It is a top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.
- Goldman Sachs’ Active Beta
The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.
- Low Interest-Rate Sensitivity
A large-cap U.S. stock selected for its low volatility and positive price performance in a rising-interest-rate environment.
- Dividend Aristocrat
The stock is among those that have increased dividends for at least 25 consecutive years.
- Momentum Factor
The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which historically has driven a significant part of the companies’ risk and return.
- Small-Cap/Value Tilt
Selected using a multi-factor modeling approach, the stock is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.
- Large-Cap Momentum
The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.
- Value Line 100
One of the top 100 stocks in the universe of 1,700 stocks for which Value Line gives a #1 ranking in the Value Line Timeliness Ranking System, based on expected price performance over the following six to 12 months.
- Large-Cap Growth
The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.
Recommendation
Buy McDonald’s Corp. (MCD) at market today. Place your initial stop at $162.50.
Options
If you want to play the options, I recommend the MCD March $170 calls (MCD180316C00170000), which last traded at $8.27 and expire on March 16.
Portfolio Update
Sell all of your remaining Home Depot (HD) February $165 calls, which last traded at $16.55, for a 211.04% gain.
Raise your stop in Home Depot (HD) to $174.00 to lock in a 10% gain.
Raise your stop in The Boeing Company (BA) to $274.30 to lock in a 15% gain.
You stopped out of NVDIA (NVDA) at $182.40 for a 11.38% loss.
You stopped out of Applied Materials, Inc. (AMAT) at $48.50 for a 13.88% loss.
Sincerely,
Nicholas A. Vardy
