McDonald’s is on track for its worst year since 2012, and the Dow stock’s pain could intensify

Returns in McDonald’s stock have been anything but supersized this year.

The fast food giant, now among the Dow Jones Industrial Average’s worst-performing components this year with a 7.5 percent decline in 2018, is on track for its worst annual performance since 2012.

Some technical analysts say the downside could continue after McDonald’s shares fell late last week on reports the chain’s salads sickened customers in multiple states.

The chart is grim on both an absolute and relative basis, said Craig Johnson, chief market technician at Piper Jaffray.

“You can see that we violated the uptrend support line in 2017, and all we’ve been doing through 2018 is we’ve been forming this kind of bearish wedge,” Johnson said Friday on CNBC’s “Trading Nation.”

The next support level should come in at around $148 per share, which would imply nearly 7 percent of further downside, according to Johnson’s chart work. After that level is violated to the downside, he said, “there’s really no support in my mind on this stock, until about $130 and change.”

Others are more sanguine on the burger chain. Mike Binger, senior portfolio manager at Gradient Investments, recently bought the stock for clients. He acknowledged the chain’s recent foodborne illness incident, but hopes it will be nothing more than an isolated incident within thousands of domestic and international locations.

“They’ve been exceeding international expectations, and we think more of that is in store and on tap here. We don’t think the stock is a double by any means, but we do think it’s a high-single digit earnings grower,” and boasts a 2.5 percent dividend yield, Binger added.

McDonald’s shares were modestly higher on Monday.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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