Investors seem to have grown accustomed to seeing the Dow Jones Industrial Average (DJIA) hitting new high after new high in 2014. Only the recent market volatility has created a situation where some of the best-performing stocks got to pull back. Most Dow stocks remain very close to 52-week highs and all-time highs — except for three, and those three are very close to having a dubious honor of hitting new 52-week lows.
It turns out that the negative trends and negative performance of shares of McDonald’s Corp. (NYSE: MCD), Pfizer Inc. (NYSE: PFE) and Wal-Mart Stores Inc. (NYSE: WMT) may just be too strong for these companies to escape. With the DJIA at almost 17,000 again, it doesn’t seem like we should be seeing 10% of the major index at levels close to 52-week lows. Yet here we are.
24/7 Wall St. has taken several views on each of these three Dow stocks to see how investors should view them. First is a 3,000-feet view of what factors surround each company. Another approach is a view of key headline and actual news that has been released in the past couple of weeks or so. The last view is the other side of the coin, via the silver lining, or what investors may ultimately take away as good news.
A last issue is that the rising tide has lifted all ships. That is, the strong market recovery on Monday morning that is due at least in part to no further escalation of Russia-Ukraine tensions over the weekend. We have shown how shares were up on Monday in midday trading and how that compares to the 52-week range. We even included the market cap and its expected annual sales for the current year.
McDonald’s Corp. (NYSE: MCD) was trading at $93.79 on Friday, only 1.7% above its 52-week low of $92.22. The nation continues to punish McDonald’s over two issues. First is that the company just cannot seem to migrate its image away from fast junk food to fast healthier food. News about low wages in the fast-food industry continues to have McDonald’s in its sights because it is the largest fast-food chain by far.
Recent earnings trends indicate that McDonald’s has hit a growth stall for the past two quarters. Its same-store sales trend was atrocious for July. Forbes recently said that it is 10 times more likely that McDonald’s equity will go down rather than rising to new highs, and it warned that sales could fall for the first time in a decade. This number is hurt further by its global sales declining after a recent food scare in China. A FINVIZ.com analyst screen showed that Baird downgraded McDonald’s to Neutral from Outperform in late July, and also that Standpoint Research issued a Strong Sell rating at the end of May.