If you are a McDonald's shareholder, you will want to make a choice. You can either sell, or start flipping burgers. You could also do both.
We are going to buy out of the money puts expiring in around a month on Mcdonald's as soon as the market opens on Monday.
Its forward P/E ratio is at 25 while the SPX is something like 14 and still overvalued even then. I think most of the downside left for this market is actually in these big overhyped names, and much of the losses are already behind bargain bin stocks trading for much fairer prices. Mcdonald’s will always trade at a premium due to their powerful brand and massive size, but it’s really silly to expect a P/E ratio that is literally giving a worse yield than risk-free government bonds for a company that has its best days behind it and sees very minimal growth.
To extrapolate on what I mean about the yield of MCD, you can take 100 over the P/E ratio of 25.5 and you will find that Mcdonald's essentially offers 3.9% of the money you put into the stock as fresh earnings each year. Instead of doing that, you could literally buy the United States 1 year bonds and receive a yield of 4.6% per year. Plus you would have a lot less downside risk on the bonds – Mcdonald's can crash at this high price, but bonds have already crashed and are unlikely to fall by much more.
Another thing I’ve noticed is that Mcdonald’s is starting to have to pay its employees more due to the shortage of labor. This will hurt their profits for a while, up until we see the unemployment start to spike.
@sycaway87, retail traders love to hate. How much money did you lose just now? Trading is not about being right every time, it's about making money, silly head. Your lack of awareness of this fact is how I know you are likely losing money despite "being right".
brncaholic
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Does elliot wave not work or do you not know how to use it... clicked on you after your ran mouth on Holey Profit who I respect. I somewhat follow MCD so clicked here and recognize you are still new to game but have a big mouth anyway. Bottoms in Bro.... get leveraged, the market is going to the moon!
bowtrix
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@brncaholic, says the retail trader with zero trade ideas. funny how people who don't even post want to pretend they know anything and try to shit on the ideas of highly profitable traders when they occasionally lose. I bet you lose money don't ya.
Wave theory works like any other strategy, which is to say it can work more often than not, but any count can be wrong at any time so of course we manage risk.
brncaholic
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@bowtrix, and btw dwad...... I was making fun of you on the bottoms in bro. U called me Retail yet my butt doesn't hurt... does yours now?
foozooloo
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You should stop trading
bowtrix
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@foozooloo, hate often comes from a place of jealousy
foozooloo
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@bowtrix, like your Xle short? Lol! You got clowned
bowtrix
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@foozooloo, I can tell you are not a profitable trader. That isn't my fault, it's yours. Do better.
brncaholic
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@foozooloo, seriously.... I clicked on him after he hated on someone who's actually legit... He should try out for CNN financial Guru