Fast-food stocks are soaring amid the volatility, here are one to buy and one to sell

As volatility rocks the market, one group of stocks is sizzling — fast food.

Stocks like Starbucks, Jack in the Box, Chipotle and McDonald's are outperforming in the past month. Of that selection, Chipotle shares look best positioned, according to Craig Johnson, chief market technician at Piper Jaffray.

The firm's analyst covering Chipotle, Nicole Miller Regan, is one of Wall Street's biggest bulls on the stock. In a note to clients last week, she said restaurant stocks are "back in favor."

As for the performance chart, Johnson noted that the stock is successfully bouncing from its 40-week moving average, and that's a bullish signal. A close above $500 per share would open the door to a new leg higher. Chipotle is currently trading around $471.

Starbucks, meanwhile, is a weaker food stock within the group. Shares have become over-bought in the near term, Johnson said, and he'd consider the coffee chain as a name to sell.

It should come as no surprise that fast food and fast casual stocks are on the rise because the group tends to trade like defensive consumer staple names in times of market turbulence, said Gina Sanchez, CEO of Chantico Global.

"This low end becomes something that you hide out in because you know people can afford this stuff," Sanchez said Wednesday on CNBC's "Trading Nation." "I think if you look at valuations, Chipotle is a stock that has been loved, and its valuation reflects that. It's [trading at] 75 times trailing earnings. But the expectations continue to be positive. So maybe it can continue to grow into that."

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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 CNBC and 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

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