WING recently broke resistance of prior ATH will it stop?

28 เม.ย.

https://www.tradingview.com/x/zjmgHtuq/

Overall market: Last week the market was all over the place, originally falling due to META, but then bounced after MSFT and GOOG earning. It seems tensions in the middle east are going to continue and any bad news can have a significant impact on the market. In addition inflation seems to be stickier than previously anticipated and higher rates for longer will break something eventually.

Consumer services/food stocks: After CMG earnings near all the food stocks took flight. WING especially seemed to have responded favorably. I am concerned that the industry got ahead of itself. CMG is a different beast than all the other food stocks. Prior to CAVA it had no true competition. They also reported a 50:1 stock split which generally brings high trade volumes and a differnet class of investor. Believe me I think CMG is out of control as well but they have a much larger moat than the others.

WING: WING for example just sells fried chick products and fries. Althoguh they may have a wide variety of sauce options thier main food item can be purchesd at almost all other fast food restueraunts. KFC, BWW, chick fil a, MCD, Wendys, Popeyes, and Burger king all compete over chicken products (wings, nuggets, chicken sandwhiches, fries). Yes they rely a lot on their franchisees and they hve a fairly priced entry, but with a chanign interest rate environment with increased fears of future pull backs will their franchise sie of the business experience a pull back or slow down?

It seems to me that this stock has gotten over priced and is priced to perfection. It has recently broken resistance of prior ATH and is 3 days away from earnings report. It is a risky bet, but I am interested in deep in the money puts on this stock. if earning beats I believe the stock has already experienced a large pirtion of its upside going into earnings. If they miss earnings/expectations they will likely experience another pull back to recently tested 50 day MA.

Overall Market:

- Last week, the market was volatile, initially falling due to META's performance but then bouncing back after positive earnings reports from MSFT and GOOG.
- Tensions in the Middle East seem likely to persist, and any negative news could significantly impact the market.
- Additionally, inflation appears more persistent than previously expected, and prolonged high-interest rates could eventually trigger a market correction.

Consumer Services/Food Stocks:

- Following CMG's earnings report, most food stocks surged. WING, in particular, appeared to react very favorably.
- However, there's a concern that the industry may have gotten ahead of itself. CMG is a unique case compared to other food stocks. Prior to Cava Group's (CAVA) emergence, it faced minimal direct competition. Additionally, their 50:1 stock split typically attracts high trading volumes and a different class of investors. While CMG's valuation may seem excessive, their competitive moat is significantly wider than its peers.

WING:

- WING primarily focuses on fried chicken products and fries.
- Although they offer various sauce options, their core menu item is readily available at most other fast-food restaurants. KFC, BWW, Chick-fil-A, McDonald's (MCD), Wendy's, Popeyes, and Burger King all compete heavily in the chicken category (wings, nuggets, sandwiches, and fries).
- While WING relies heavily on its franchise model with a relatively affordable entry point, will rising interest rates and potential economic downturns lead to a slowdown in franchise expansion?

Investment Thesis:

- It appears WING's stock price might be inflated and priced for continued flawless execution.
- It recently surpassed its previous all-time high (ATH) and is just three days away from its earnings report. This creates a risky investment opportunity.
- Considering these factors, I am interested in deep in-the-money puts on this stock.
- If earnings exceed expectations, the stock price has likely already captured most of its potential upside. Conversely, if earnings miss expectations, the stock will likely experience another pullback towards its recently tested 50-day moving average (MA).

WING MCD CMG YUM DPZ CAVA