Lost? Ask the Clown for Directions

By Kyle Metivier - May 9, 2012 | Tickers: MCD, WEN | 0 Comments

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“I wish I had an answer to that, because I’m tired of answering that question.” – Yogi Berra

Although I am by no means anything close to an investing expert, every now and then I get asked a question or two with regards to beginning a smart, safe, growth-oriented investment strategy. I don’t charge for my opinions on any scale, whatsoever. I like to give folks a pair of water wings, suggest mildly entertaining and insightful places to start their own research, and pull the trigger with whatever company they feel is right for them. The ultimate goal is not to become the Michael Phelps of investing, but to see some decent returns someday, so that we can swim together in the deep end. I will tell anyone who cares (even some that couldn’t possibly care less), what I am putting my hard-earned dollars in, and I post every single investing transaction I make, on Twitter (@kem312).

So if you ever happen to be a passenger in my vehicle, as I steer my directionally-challenged mind through my new home in the DFW Metroplex, odds are the topic of stocks will come up, since people that have the tremendously underrated trait of deductive thinking know that I will offer up any sort of opinion about anything related to the market. I never make stuff up, mind you, I am unflinchingly honest, if I haven’t heard of a stock, or it happens to be on the pink sheets, I will tell you exactly what’s what.

Now just because I watch my fair share of cooking shows, and I happen to be an above-average, self-trained kitchen hand, a lot of people make the connection that I may know a thing or two about restaurants and, quite possibly, how to go about investing in one or two. It can be a difficult space to invest in, and I have had my own negative experiences with the occasional dalliance, most notably, Wendy’s (NASDAQ: WEN), (“Thanks for the Gift, it Truly Sucked”). Now although the red-headed, square-burger girl recently jumped to the number two spot over Burger King for patty sales, the direction the company has been on since the passing of Dave Thomas makes me wonder if I’m the one driving. I have had far too many experiences with these two fast-food bastions of frustration, both personal and professional, so I know a little bit about where they are coming from, but I’m not sure anyone can truly profess as to where they might be going. So it may be wise to steer clear of the upcoming, “re-IPO” for Burger King. Unless you work for 3G Capital, since it will certainly benefit them, more than the investor.

In the constant battle for who gets to be second-best behind the clown shoes, Wendy’s has re-invented what constitutes as breakfast, and I have heard from a respected authority that “…it’s pretty good.” I guess the 16^th time is the charm, and the painful process has done absolutely nothing to help the share price, currently under $5. The challenge for market share is all the more muddy, so even though the competition can’t keep the egg or remnants of clown makeup off their faces, no matter how good breakfast is, the most important meal of the day is riddled with options.

Everyone offers breakfast, so welcome to the game, albeit late, Wendy’s. Now you also have to deal with every businessperson that thinks they are the next Bobby Flay when it comes to flipping burgers, as well. Now everyone has a burger joint, Smashburger, In-N-Out, Five Guys, Mooyah, and they are all fresh, and apologies to a former employee, they are all far more fun. When it gets to the point where everyone is doing it, yours has to be better. There has to be something different about your experience that gets people crawling through your door to continually consume your carnivorous creations. I’m going to offer some insight: there is nothing, absolutely nothing at all differentiating a Wendy’s experience from any of the others. To be brutally honest, the “new guys” on the burger block are much more friendly, welcoming, engaging and appreciative. Suffice it to say, since their ground beef isn’t frozen either, they’re “fresher” in every aspect (even never-frozen, fresh-cut fries).

The same can be said about McDonald’s (NYSE: MCD) Which is a truly emotionless experience is as common as a broken-down McFlurry machine. But they are so entrenched in the appetites of so many red-blooded Americans I cannot say that I have driven by many with sparsely populated parking lots. I don’t eat clown food, myself, but the heir to my culinary throne enjoys a reward once a week, for good behavior. Once his taste buds are all grown up, I’m certain he will prefer to get “smashed”.

So for what it’s worth, if there’s the urge to enter the crowded space, I have to offer up the reasoning, why put your money anywhere else, when number one offers a juicy dividend (2.9% yield), on their menu and it seems that no matter what gets thrown at them, Selma Hayek, David Beckham, or hip, new burger bistros, they remain the true “king” of burgers. As long as the sign reads, “Billions Served”, and as long as people can reach the Wal-Mart pharmacy counter when they ride their Rascals to pick up their Lipitor prescriptions, investing with Mickey D’s, especially off 52-week highs ($102), given the current price, might be a nice spot to take a shot with your investing dollars. You may also want to look at a pharmaceutical company as long as Ronald reigns supreme, while you’re at it.

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