Mike Khouw looked at McDonald's chart this week and decided the company itself is now a value play. Not the burgers. The stock. He said this on television where people were watching.
McDonald's announced its slowest sales growth in over a year and responded by revising its entire U.S. value strategy. The strategy that built an empire on selling dollar menu items to people who can't afford two-dollar menu items apparently needs work. Revolutionary stuff.
Khouw saw this news and thought: cheap stock. He looked at a company scrambling to figure out why fewer people want McChickens and called it a value meal for his portfolio. The metaphor writes itself when you're willing to ignore what words mean.
Retail traders heard "value" and "McDonald's" in the same sentence and started Googling whether they can buy shares with Monopoly game pieces. They cannot. I checked.
The technical picture here is straightforward. Sales growth slowing means people buying less food. Less food sold means less money coming in. Less money coming in means the value strategy failed. Failed strategy means new strategy. New strategy means admitting the old strategy failed. But call it value and suddenly it's an opportunity.
Khouw gets paid to say things like this. You get charged commission to act on them.
McDonald's will launch some new promotion where the Big Mac costs slightly less and comes with fries that were already included. Customers will feel grateful. Sales will tick up for one quarter. Analysts will call it a turnaround. The stock will move three percent in a direction.
Then Khouw will be back on TV calling something else a value meal. Probably Chevron. Maybe Boeing. Whatever's down that week and needs a food metaphor to make retail traders hungry.
The only value meal here is watching someone confuse a failing business strategy with a discount ticker symbol and getting paid for it.
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