Market Overview

Five Star Stock Watch: The Wendy's Company

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Five Star Stock Watch: The Wendy's Company

Wendy's released earnings Monday and apparently the market likes the preztel bun as much as consumers, which is understandable.

In response, the stock jumped over six percent on more than five times its normal volume.

Unfortunately, if you weren't already in the stock, your cheese was left off the bun. Do you chase and hope for the best, or is there another opportunity to get in? The analysis below should help.

Related: Five Star Stock Watch: J.C. Penney

The company: The Wendy's Company

Ticker Symbol: (NYSE: WEN)

Sector: Services 

Industry: Restaurants

The Wendy’s Company engages in operating, developing, and franchising a system of distinctive quick-service restaurants. The company’s restaurants specialize in offering hamburger sandwiches and featuring filet of chicken breast sandwiches; salads, soft drinks, Frosty desserts, and kids meals; and various promotional products on a limited time basis.

 

As of August 13, 2013, its restaurant system included approximately 6,500 franchises and company-operated restaurants in the United States, and 28 countries and U.S. territories worldwide.

 

Please take a look at the one-year chart of Wendy's below with added notations:

For the most part, Wendy's has been stuck in the range between $8 and $9 over the last four months. Outside of a spike higher in November, the stock just hasn't been able to get above that $9 level.

So, it's not surprising that Monday's surge stalled right under $9. A solid move above that level should mean higher prices for the stock, most likely a run to at least $10.

Related: Five Star Stock Watch: Facebook, Round Two

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

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