A few stocks are reportedly positioned to capitalize on the market’s momentum and potentially experience a breakout, according to a bullish price chart pattern favored by technical analysts. McDonald’s and Cisco Systems are among the companies that have recently exhibited the "golden cross" pattern. This pattern is identified when an asset’s 50-day moving average surpasses its upwardly sloping 200-day moving average. These stocks could see significant gains as the three major U.S. indexes also show promise for a monthly rise. Specifically, the Dow Jones is up by 1.4% in September, while the S&P 500 and Nasdaq Composite have risen by nearly 1% and 1.1%, respectively. Below are the stocks identified to have formed golden cross patterns, based on data from FactSet.
McDonald’s
McDonald’s shares have risen by nearly 1.3% this year and surged over 17.5% this quarter. The boost follows McDonald’s announcement in mid-September to extend its $5 value meal offer into December across most U.S. markets. On Tuesday, the stock was on track to achieve a new all-time high, the first since January 19, when it closed at $300.53. Goldman Sachs recently reiterated its neutral rating on McDonald’s but increased its price target by $41 to $325, indicating an 8.7% potential upside. Analyst Christine Cho noted that McDonald’s has seen sustained sales momentum following the launch of the $5 meal deal after a period of slowdown. She emphasized that McDonald’s scale advantage justifies its higher valuation premium relative to the S&P 500 and peers, potentially strengthening its position in the fast food industry.
Cisco Systems
Cisco Systems shares have increased by about 3.8% this year. The stock has jumped more than 10% this quarter following the company’s second-quarter results, which exceeded analysts’ expectations. In August, Cisco also announced a 7% workforce reduction. Pierre Ferragu of New Street Research is optimistic about Cisco’s potential for margin expansion driven by its subscription-based and software products as customer destocking slows. His price target of $57 implies a 9.2% upside from Monday’s close.
CF Industries
The fertilizer manufacturer has seen its stock rise by 6.7% this year and nearly 14.5% this quarter. Analysts polled by FactSet have an average price target of $83.79, suggesting less than 1% upside from Monday’s close. However, Wells Fargo reiterated its overweight rating on CF Industries, highlighting the company’s "significant natural gas advantage and share buybacks." The firm noted that the stock is trading at a discount and could appreciate further if CF Industries advances with its clean ammonia projects. Wells Fargo upgraded its rating from neutral to overweight and raised its 12-month price target by $4 to $92, indicating a potential 10.5% gain.
