This New Retail Favorite Stock Has Staying Power

The past few weeks have seen a resurgence in trades popular with retail, rather than professional, investors. Some of these companies have some good stories behind them, and others have a good story and a good company behind them.

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  • Case in point? Wendy’s (WEN). The hamburger chain has become a favorite play on messaging boards. And with an astute social media presence, as well as a new app and loyalty program, it’s making burgers feel high-tech.

    The popularity hasn’t been lost on analysts. Or the company’s fundamentals. While shares are up less than 10 percent over the past tear, earnings are up 187 percent and revenue is up 14 percent. Return on equity is 29 percent.

    The company’s innovations and menu changes are likely to continue keeping customers coming in the doors or in the drive-thrus.

    Action to take: Investors may like shares, as the company pays a 1.7 percent dividend that was just increased.

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  • For those looking beyond a stock play, the latest pop and drop in shares on retail interest may spark a further longer-term rally in shares. The November $25 calls are an at-the-money trade and going for about $2.60. Traders can likely leverage a move higher in shares into a high double-digit return with this options trade.

     

    Disclosure: The author of this article has no position in the stock mentioned here, but may make a trade in this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.