Things haven't been looking so great for the champion of American fast food... I've covered McDonald's (MCD) a few times here at the Chaikin PowerFeed. Regular readers will recall that I discussed the company back in December. At the time, McDonald's (MCD) had just announced a menu refresh.
McDonald's Is Still Struggling
By Vic Lederman, editorial director, Chaikin Analytics
Things haven't been looking so great for the champion of American fast food...
I've covered McDonald's (MCD) a few times here at the Chaikin PowerFeed. Regular readers will recall that I discussed the company back in December. At the time, McDonald's had just announced a menu refresh.
In that essay, I told readers that "old burgers aren't this stock's only problem." High prices had pushed customers away.
A menu refresh wasn't going to cut it.
Then in February, I discussed how McDonald's blamed its problems on conflict in the Middle East. As I said at the time, CEO Chris Kempczinski wanted folks to think that was the big problem for the company.
In June, I reminded readers that the company was still struggling. By then, its share price had collapsed roughly 9% since I first discussed it back on December 4. Over the same time frame, the S&P 500 Index had surged 19%.
Now, you've probably seen McDonald's in the news recently. And it's not good.
Meanwhile, McDonald's just released third-quarter earnings yesterday. In fact, it even showed signs of a very early rebound. But a terrible mistake has overshadowed it...
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As you may have heard by now, E. coli contaminated the company's onions. The U.S. Food and Drug Administration ("FDA") found that more than 75 people got sick eating food from McDonald's.
The outbreak hospitalized at least 20 people. And at least one person, a 15-year-old girl from Colorado, is battling kidney failure.
Folks, this is bad. Nobody wants to fear a life-altering infection when they go out for a burger.
Unfortunately for McDonald's, that's the battle the company is fighting now. And it means a rough end to a rough year for the company.
MCD shares are roughly flat since the start of 2024. On the other hand, the S&P 500 has soared about 22% so far this year. Take a look...
Put simply, this is a major wipeout for McDonald's.
And the Power Gauge has picked up on that...
In the chart below, you can see the stock's sideways movement this year. And you'll also notice that it has been in "neutral" or "bearish" territory for just about all of 2024. Take a look...
Right now, the only thing that looks good about the company is that the stock has come off of the low it hit a few months ago. And we see that reflected in the Power Gauge's ratings...
Today, McDonald's earns a "neutral-" rating in the Power Gauge.
Digging deeper into the four categories, the company earns a "very bearish" rating in Financials... a "bearish" rating for both Earnings and Experts... and a "very bullish" rating in Technicals.
So where does that leave us as investors?
Well, it's possible that we're seeing early signs of a turnaround. McDonald's has refocused on "value." And that's slowing its sales declines.
Unfortunately, the company stumbled into a health crisis at the worst possible time. And it will take a few months for that to burn off.
I'll be watching this stock closely. And I recommend you do the same. But personally, I'll be waiting for stronger confirmation from the Power Gauge.
As the stock's performance this year shows, McDonald's can produce terrible returns... even in a roaring bull market.
So, I wouldn't recommend trying to call the bottom early on this stock. The Power Gauge says it's not ready quite yet.
Good investing,
Vic Lederman
P.S. Folks, this kind of situation shows what the Power Gauge is capable of. It picked up on a big-name stock that should be performing well in a strong market like this... but has been warning us to be cautious.
Meanwhile, Chaikin Analytics founder Marc Chaikin just held a big reveal on another way he's using the Power Gauge in this market...
Yesterday, Marc held a special event to break the story about a big disconnect in the markets right now. And as he explained, he's using our one-of-a-kind system to spot exactly how investors can take advantage.
If you missed Marc's big reveal, you're in luck. You can still watch a replay with all the details right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.37%
8
18
4
S&P 500
+0.16%
131
283
79
Nasdaq
+0.96%
28
62
10
Small Caps
-0.29%
515
1036
368
Bonds
+0.15%
Information Technology
+1.35%
31
33
4
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Discretionary
+1.56%
Communication
+1.42%
Information Technology
+0.68%
Real Estate
-0.18%
Financial
-0.53%
Industrials
-1.08%
Health Care
-1.79%
Materials
-1.94%
Staples
-1.95%
Utilities
-2.53%
Energy
-2.7%
* * * *
Industry Focus
Aerospace & Defense Services
7
21
4
Over the past 6 months, the Aerospace & Defense subsector (XAR) has outperformed the S&P 500 by +1.75%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #11 of 21 subsectors and has moved down 3 slots over the past week.
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