McDonald’s makes comeback with record high

The stock market loves all-day McMuffins and McGriddles, too.

Driven partially by the popularity of its new all-day breakfast program, McDonald's shares hit a record high on Wednesday, even as the market as a whole stagnates. This marked a notable change from recent years, when McDonald's was marred with stagnant sales, dwindling popularity and badly underperforming shares.

"Who would expect that McDonald's is the number one performing Dow stock over the last year?" said Eddy Elfenbein, editor of Crossing Wall Street. "It was in September that the company tweeted news of the all-day breakfast, and since then it's up nearly 40 percent."

The huge uptrend largely came from a year where McDonald's reasserted itself in the U.S. and internationally. The significant sales increases drove the fast-food giant to crush forecasts when it reported first-quarter earnings in April.

Read MoreMcDonald's has 'no plans of easing up' following all-day breakfast win

According to Stacey Gilbert, head of derivative trading at Susquehanna, options traders are taking notice.

"[We aren't seeing] aggressive put buyers, this would be investors concerned about a pullback," she said Wednesday on CNBC's "Power Lunch." "We are seeing buyers of calls, buyers of these options looking for continued upside."

"Investors are not pricing in significant risk. This is very different than consumer discretionary as a whole, which definitely has a more bearish tone," she added.

But some traders caution that the Golden Arches might be at a standstill once again, especially given how much McDonald's beat their first-quarter earnings estimates.

"[McDonald's may have hit] another new all-time high today, but I think now that it's going about 23 times earnings, I think it's had a pretty good run. I don't see it being able to run much further from here," said Elfenbein.

Indeed, at $132.04, the average analyst price target (per FactSet) is just 2 percent above the stock's Wednesday closing price.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more