Heisenberg
Stock Chartist, Long/Short Ideas
McDonald's is the most obvious buy: its RSI is at levels unseen since 1974, and with bearish headlines on an already beaten-down price, there is little room to get more bearish. Fear articles and downgrades are institutions pushing the price lower so they can load up. This company has survived every recession, crisis and panic for 50 years, so RSI this low on a company this safe makes it a generational entry to build patiently over time. x.comÂ
McDonald's could draw buying from older investors or a broader sector rotation. The biggest concern is that it is not yet a buy on the chart, as it is not yet trading at a 10% discount to the lowest Street price target. x.com x.comÂ
McDonald's shares keep falling because the consumer is not doing well, with disposable income at lows. The stock briefly dipped below $250 before rebounding to $251 and remains near multi-year lows. x.comÂ
McDonald's business isn't stressed even though its chart is. The stock sits below its 200-week EMA, with momentum starting to turn bullish. x.comÂ
McDonald's is trading at its highest free-cash-flow yield in a decade, outside the COVID crash. x.comÂ
McDonald's has turned from a growth equity into a bond proxy, a vicious cycle as Treasury yields rise. Per @The_Prophet_, yields moving from about 4% toward 5%+ raise the discount rate on its slow-growing cash flows, give income investors a risk-free alternative, and pressure its capital-intensive franchise system. Investors forget McDonald's shares were unwanted in the mid-2010s. x.comÂ
McDonald's is getting more interesting for dividend investors: its dividend has compounded about 14% a year for 26 years since 2000. x.comÂ
McDonald's franchise model lets it collect twice on every sale while franchisees supply the capital, pay workers and manage food costs. Franchisees pay an initial fee, rent with a sales-based component and sales-based royalties, which brought $16.55B of franchised revenue last year. McDonald's is essentially the toll booth on the highway to fast-food profits. x.comÂ
McDonald's leadership has lost credibility: at a major investor day, the CEO is only "hoping" for a turnaround, which is reason enough for shareholders to sell. The brand has drifted far from the era of movie tie-in glasses and toys for films like Shrek and Toy Story, and now the CEO does not even want to eat the food. x.comÂ
Asset-light businesses that take a cut of every transaction have one of the most powerful business models, pairing low capex and high margins with steady cash flow from royalties and fees. That is the basis for a portfolio of McDonald's, Uber, Texas Pacific Land, Visa, Restaurant Brands International, Marriott, Franco-Nevada, CME Group and Arm, built to test whether such businesses can outperform the market. x.comÂ