It's a food fight!
McDonald's, Starbucks and Chipotle soared to all-time highs last week on the back of earnings reports that topped expectations.
Starbucks and Chipotle shares have now returned 54% and 80% this year, respectively, far outpacing the S&P's 21% rise.
The runup has the Street divided. Some say there's more upside — some say valuations now look stretched.
Federated Investors' Steve Chiavarone falls into the former camp. He says consumer stocks, and fast-food names in particular, can move higher given a favorable economic backdrop coupled with strategic initiatives by the individual companies.
"The consumer is unshakeable," he said Friday on CNBC's "Trading Nation." Low unemployment, rising wages and low gas prices mean more money in consumers' pockets, which means the "consumer is going to show up" and dine out with frequency.
In addition to a favorable economic backdrop, Chiavarone says that these fast-food giants are "helping" themselves by focusing on digital initiatives aimed at attracting and maintaining a younger and loyal following.
"Whether it's the kiosks and all-day breakfast at McDonald's; whether it's mobile ordering and digital loyalty at Starbucks [or] healthier options at Chipotle, these companies are remaining relevant with younger customers and becoming more efficient on the cost side," he said. "The best bet in the market right now is the US consumer."
On the flip side, Blue Line Futures' Bill Baruch says investors shouldn't chase these stocks around all-time highs. "There's a lot of momentum," he said, but he's staying "cautious," saying investors shouldn't buy these stocks simply "because of fear of missing out."
Baruch says the average directional index — used to determine how a chart or stock is trending — is flashing a warning sign in Starbucks and Chipotle's stock charts.
Starbucks' ADX line "has hit a point where it's exhausted in the past," Baruch said. While Chipotle is currently "breaking out," he added, that trend may be about to reverse.
