This Fast Food Stock Could Be the Next Short Squeeze Target

Simpler Trading analyst likes Jack in the Box as a short-term options trade due to unusual activity in the markets.
Anthony RussoFeb 15,2021,15:42

The short squeeze rally may still not be over, with one expert seeing the shares of Jack in the Box (Nasdaq: JACK) as “a short-term options trade.”

Danielle Shay, the director of options at Simpler Trading, told CNBC’s “Trading Nation” on Friday that Jack has the potential to be the next short squeeze target that Reddit retail investors aim for. Currently, Jack’s short interest sits around 9%, according to FactSet.

Shay notes that the stock isn’t too far from its all-time highs; while that would normally shy her away, she makes an exception due to the unusual activity in the markets.

“With something like this that has short interest, it does have the potential for a short squeeze and it has earnings coming up,” Shay said.

She added, “For that reason, I do like to trade shorter-dated calls in the earnings series. That way, I can take advantage of just the momentum going into the earnings report and the rise in [implied volatility].”

The stock’s dividend yield is 1.59%, while its PE Ratio sits at 26.07.

For investors looking for more of a long-term play, Shay recommends taking a look at the world’s largest fast-food chain McDonald’s (NYSE: MCD). She has a $240 target on McDonald’s shares.

In November, I recommended buying McDonald’s, as investors were shifting their focus on casual dining after encouraging news on the vaccine. While the stock hasn’t seen much gains since, I like McDonald’s as a long term play as well. Its dividend yield sits at 2.41%

So far, shares of Jack have risen 8% year-to-date. On Friday, JACK stock closed at $100.54 per share and slid 45 cents after hours.

The markets are closed Monday in observance of President’s Day.

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Topics:McDonald's, Jack in the Box.