McDonald’s Corporation (MCD) stock has surged nearly 30% this year, and with Tuesday’s 1.11% lift, MCD stock has reached my near- to medium-term price target of $120.

To be sure, McDonald’s stock continues to be supported by several factors, including a turnaround story that is believable and visible … as well as a somewhat defensive nature of its business. However, for the near-term, MCD shares look overbought — and active investors and traders should be taking profits and rebuying on dips.

I last discussed McDonald’s stock on Oct. 15, and said that the still-negative public view of the restaurant chain also was reflected in investor pessimism on the stock, and didn’t reflect the realities of a turnaround plan that was well on its way and working well. From a new and better tasting menu to operational upgrades, McDonald’s implemented big and noticeable changes in 2015 — and I see this continuing to act as tailwind for MCD stock going forward.

All in all, I’m pretty bullish — on McDonald’s as a company, its turnaround story and how it fits into a slower-economic-growth environment.

However …

As a risk manager, I also like to take at least partial profits in stocks when a) my near- to medium-term price targets are met, and b) overbought technical readings become severe. All of this will allow me to put capital back to work in the stock at lower prices.

Read my full analysis HERE


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