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.

Videos

Trades to Watch

Trader Bios

About

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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect