Does sentiment show a contradiction or trade opportunity?

Apparently the end is nigh: well, for McDonalds at least. Over the past couple of months, barely a week goes by without a commentator reporting the imminent demise of the world’s most famous fast food restaurant. The advent of different types of fast food outlets: Subway, Nando’s, 5 Guys and Taco Bell to name a few, have all been reported to be affecting McDonalds popularity. Allegedly, this has led to the chain introducing the first all-day breakfast menu in its history.

So, with the extremely difficult logistics of this task and pressure likely to be applied on McDonalds’ franchise holders, along with the increased competition from the brands reported above, you would think that the share price would reflect this pessimism. No, absolutely incorrect.  McDonald’s stock is currently trading at around $111; this up over 22% just this year.  A performance worthy of any tech stock let alone an established fast food chain. But what does this mean? Can we concur from this that there is absolutely nothing wrong with their current business model, or can we deduce that this could be the best shorty opportunity of 2015?

Good luck.

Jordan Hiscott, Chief Trader

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