McDonald's, Fast Food Stocks May Offer Super-Sized Returns as Americans Go Off Diet
Despite some recent bad press, the smart money is starting a full-fledged Mac-Attack for fast food stocks. And although America has a penchant for ground round and greasy fries, today’s fast food menus include low fat and/or heart smart selections such as grilled chicken, fruit salads and yogurt topped with granola. Is it time to get in line and super-size your portfolio, or is this a binge that will leave you feeling sick?
“Crazy Legs” joins the guys – he’s a competitive eater and he chowed down on McDonald's Chicken McNuggets as the guys went thru the fast food trades. (Don’t worry, an EMT was in-studio to make sure he didn’t get sick.)
Jeff Macke reminds that Wendy’sguided down for the quarter and up for the back half of ’07. He says that makes it a great tell stock because the stock didn’t sell off. (Otherwise traders would have sold-off on the short-term negative news)
Jeff adds that if investors bought a fast food basket of stocks made up of McDonald’s (MCD),Wendy’s (WEN) and Burger King (BKC) one year ago, they’d be up 32%. By contrast if those same investors bought a healthy basket of stocks made up of NutriSystesm (NTRI), Weight Watchers (WTW) and Life Time Fitness (LTM), they’d only be up about 7%. To Jeff that says invest in bad health foods.
Karen Finerman recommends YUM Brands (YUM) because it’s the world’s largest quick service restaurant group made up of Taco Bell, KFC and Pizza Hut. Since they have a huge international business and investors can buy this stock at under 17 times earnings, she loves this investment.
Dylan asks if the fast food run is over.
Jeff Macke responds that he doesn’t think so. Guy Adami agrees.
Eric Bolling likes Dominoes (DPZ). He says the chart looks great. Also they announced a stock buy-back and they have a great program passing along success to minorities who work in their stores.
The bottom line is that Crazy legs ate 33 McNuggets in 4 minutes. Unfortunately, it’s not a world record but it definitely a "Fast Money" first.
On MAR 21, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money tradersBolling Owns Soybeans, Gold, Silver, Is Short Corn Finerman's Firm And Finerman Own (HD), (WMT), (ABN), (BAC), (C), (MO), (NYX) On 2/27/07 Finerman's Firm And Finerman Owned (HD) Najarian Owns (MS), (C), (BAC), (XLF)