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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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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