In a bull market, companies will try all sorts of new ways to compete with each other. When times get tougher, companies that are quick to cut back to the basics are the most likely to keep their losses to a minimum.
That’s especially true as smaller or more leveraged players end up dealing with steep losses or even bankruptcy. Companies that can simplify and streamline operations should be more focused and have higher profit margins as the market turns around.
One company that tends to expand its customer options during goods times is McDonald’s (MCD). The fast-food giant is now scaling back its offerings, including an end to the trial McPlant offerings, made in part with Beyond Meat (BYND).
No surprise, McDonald’s is near a 52-week high right now. While the economy has contracted, the company is unlikely to lose customers, and may even pick up more customers who are downscaling from higher-end restaurant offerings.
Action to take: This industry-leading company is a bit pricey compared to the S&P 500 at 26 times earnings. But it should continue steady growth for investors over time. The stock yields about 2.2 percent here.
For traders, the January $270 calls, last going for about $12.00, can leverage a continued rally higher into a mid-double-digit profit. Traders should look to buy on a big down day for shares in today’s volatile markets, and potentially look to take smaller profits on any big one-day jump in the stock.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.