Top Stock Picks '09: McDonald's (MCD)

Posted Jan 8th 2009 8:00AM by Steven Halpern
Filed under: Newsletters, McDonald's (MCD), Technical Analysis, Agriculture, Stocks to Buy, Best Stocks for 2009

This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.

"Trading near its all-time high, McDonald's (NYSE: MCD) -- my top idea for 2009 -- is a true relative-strength leader," says Ryan Detrick.

The technical analyst with Schaeffer's Investment Research, explains, "With the shares near their all-time high, MCD is a true relative-strength leader. Technically, the stock continues to find support from its rising 20-month moving average, as this trendline has provided support since mid-2003.

"McDonalds is the world's largest fast-food chain, with more than 31,000 restaurants worldwide. Given the record job losses and deteriorating worldwide economy, MCD should continue to do well as consumers will downgrade to more affordable dining options.

"Or as CEO Jim Skinner put it, 'McDonald's seems well positioned for recession. In bad times, people think twice about where to spend money when going out for food.'

"With the shares near their all-time high, MCD is a true relative-strength leader. Technically, the stock continues to find support from its rising 20-month moving average, as this trendline has provided support since mid-2003.

"Even though the shares are among the strongest performing names in the Dow, we still see signs of skepticism. This shows us that there is still money on the sidelines, which could push the shares higher.

"For example, looking at the analyst rankings, there are nearly twice as many 'holds' as there are 'buys.' This configuration leaves the door wide open for upgrades into next year. Also, short-term option traders continue to try to pick a top by playing bearish puts.

"Add it up, and the positive price action and strong fundamentals, coupled with the negative overall sentiment, makes MCD look ripe for more gains next year."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Tags: agriculture, fast food stocks, global stocks, mcd, mcdonalds, relative strength, restaurant stocks, ryan detrick, schaeffer investment research, steven halpern, thestockadvisors.com