Sometimes a company just gets it. Despite the challenges companies have to raise shareholder value, McDonald’s (MCD, $64.23, up $2.37) is bending over backwards and doing cartwheels as we head into the Olympics. The timing couldn’t be any better.
The Beijing Olympics started today and it just so happened that McDonald’s reported their numbers for July same-store sales. Coincidence? Nah. The company reported a better-than-expected 6.7% increase in its U.S. stores and a 15.9% rise worldwide.
McDonald’s is a sponsor of the games and has done a good job of getting in the public’s eye at the right time. The world’s biggest hamburger chain could soon become the world’s largest chicken chain with its new chicken biscuit breakfast sandwich and its chicken sandwich, which by the way, rivals that of Chick-fil-A sandwich.
Last month, McDonald’s warned of higher beef and chicken costs but has managed those costs extremely well. The dollar menu continues to be a hit and more good things could be in store when the company rolls out specialty coffee beverages in more locations.
The last time I mentioned McDonald’s was on June 30 and at the time I didn’t see any option trades that I liked. I did, however, talk about Sonic (SONC, $15.69, up $0.41) which was trading at $14.42. Sonic was down nearly 50% from its 52-week high and I mentioned the strong support at $14.
McDonald’s was holding up well but I really felt Sonic was a good buy at those levels. The stock was a great buy at $14 but I also liked the December 17.50 calls (ZSQLW, $1.10, up $0.20) which were trading for 70 cents. They were a “lottery pick” but so far we are up over 50%. These calls will be worth at least $2.50 if Sonic can get back to $20 by December 19 but I wouldn’t have a problem if positions were closed here for a 50% profit.
Sonic is no McDonald’s but either way, we’re “lovin’ it”.