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On Strong McDonald’s Earnings: Buy, Sell or Hold?


As shares of McDonald’s declined Tuesday despite better-than-expected quarterly results, the “Fast Money” pros staked their positions on what to do next.

Trader Stephen Weiss saw the stock as a defensive play.

“If you believe the economy is going to get into hyperdrive, this stock is going to underperform,” he said. “It’s as simple as that.”

McDonald’s stock closed 2.18 percent lower at $98.75. Shares hit an all-time high of $102.22 last month.

MCD Pullback = Buying Opportunity?

Trader Steve Cortes saw a currency headwind.

“I don’t doubt that McDonald’s is doing fabulously. I think they’re at the right price point, both in Europe and here. But I think currency is going to steal too much of the profits,” he said. “I’m not short it, but I wouldn’t be long either.”

Bernstein analyst Sara Senatore brushed aside currency concerns on strong performance. Adding about 20 cents of tailwind to the company’s stock price last year, currency rates would account for a similar downside this year, she said.

But the company’s performance — including an 11 percent increase in Q4 profit and comps greater than 10 percent — was solid.

“If you look at the chart on McDonald’s, it’s had a great run,” she said. “It’s a $100 billion market cap, and it outperformed by north of 30 percent last year.”

Senatore did not see similar strength in Starbucks and Chipotle, which report earnings on Jan. 26 and Feb. 1, respectively.

“With Starbucks and Chipotle, I think, going into the quarter there are still come concerns around margins,” she said. “The expectations into McDonald’s were pretty high across the board, both on sales and on the earnings figure.”

Senatore called MCD “a good core holding.”

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Trader disclosure: On Jan. 24, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova owns AXP; Terranova owns F; Terranova owns APC; Terranova owns WFM; Terranova owns OXY; Terranova owns XOM; Terranova owns TRLG; Terranova owns SBUX; Terranova owns JNPR; Terranova owns VRTS; Terranova owns IBM; Terranova owns LQD; Terranova owns SU; Terranova owns SJM; Terranova owns BRCM; Terranova owns MUB; Terranova owns EMC; Terranova owns CSCO; Terranova owns V; Terranova is long UNG April $5 puts; Edwards is long AAPL; Edwards is long GLD; Edwards is long MSFT;

Edwards is long INTC; Edwards is long MCD; Edwards is long JNK; Edwards is long BMY; Edwards is long WLT; Edwards is long QCOM; Edwards is long GWW; Weiss is long AAPL; Weiss is long RIMM; Weiss is long VZ; Weiss is long QCOM; Weiss is long BRCM; Weiss is long EUO; Weiss is long CSC; Weiss is long GM; Weiss is long F; Weiss is short V; Weiss is short WLT

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Gordon is short EUR/NZD

For Sara Senatore
(MCD): I, Sara H. Senatore, Senior Analyst(s)/Analyst(s), certify that all of the views expressed in this publication accurately reflect my/(our) personal views about any and all of the subject securities or issuers and that no part of my/(our) compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views in this publication.

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