In his first "Executive Decision" segment of Wednesday's Mad Money program, Jim Cramer spoke with Todd Penegor, president and CEO of Wendy's (WEN) . WEN delivered spectacular earnings that included a nine-cent-a-share earnings beat, a 16% rise in same store sales, and a 20% boost to the company's dividend.
Penegor said that Wendy's continues to bring in more customers and more often thanks to the addition of breakfast and its great menu of lunch and dinner items. The chain is also seeing a lot of movement into higher-end menu items, which is adding to the company's profitability.
Sales have been so strong at Wendy's, Penegor said they've even been able to raise prices slightly for some items to help offset rising costs. Penegor said drive-thru and delivery remains their biggest opportunities. Wendy's is currently testing ghost kitchens that are dedicated to delivery, and so far, those locations are doing very well.
When asked for his thoughts about catching the attention of the WallStreetBets crowd and becoming a meme stock, Penegor said that he views any publicity as a good thing.
We reviewed the charts of WEN back on June 8 where we wrote that "Traders who are comfortable with a sudden increase in volatility could go long WEN as close to $25 as possible. Risk a close below $22.50. The $43 area is our price target for now." Let's check the charts once again.
In this daily bar chart of WEN, below, we can see that prices weakened enough to stop out our long recommendation. I assume traders are flat (no position). WEN has traded sideways since early June in a relatively narrow range. Prices have been trading around the 50-day and 200-day moving averages.
The trading volume has been unimpressive and the On-Balance-Volume (OBV) line has been neutral or flat. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of WEN, below, we see a more positive-looking picture than the daily chart above. Prices are holding above the 40-week moving average line which is moving sideways. The weekly OBV line is strong and suggests that buyers of WEN have been more aggressive. The MACD oscillator is pointed down but close to a turn to the upside.
In this daily Point and Figure chart of WEN, below, we can see an upside price target of $26.
In this weekly close only Point and Figure chart of WEN, below, we can see a higher price target in the $49-$50 area.
Bottom line strategy: Traders could go long WEN on strength above $24 risking to $21 this time.