I hope that you all have been able to "take in" and comprehend what has been TWO ---- Fundamental changes ---- in McDonalds (MCD) and Chipotle Mexican Grill (CMG). Wow! Who'd have known we'd get such a clean basic lesson played out almost simultaneously!
McDonalds was sliding to nowhere.... a lack of growth in sales... profits declining. They CHANGE the CEO and change a couple of menu items (adding breakfast all day) and BAM! The stock takes off and sales jump etc.
While that didn't seem like a big deal to newbies.... it is! But beware -- a change like that (CEO) doesn't always work out quite so well. My point is more that you need to be aware of changes and give so extra attention to them. They can be very important.
Chipotle has a food safety problem -- I'd call that a very HUGE fundamental change -- and their stock tanked. That would be a pretty obvious "result". Any time you hear a company having a "safety" issue - your antennas better perk right up because that's not going to work out well for your shares!
Now.... we just saw the results reported for CMG. Not good - in fact - I'd say they were horrible.
Here's the SECOND fundamental change we would want to watch for. Can they get the consumer confidence back? Is this a buying opportunity? Can they turn this very damaging problem around and regain the public trust? They MUST regain the trust of the consumer. Period. They can't open a bunch of new stores and have that be good news on their quarterly reports. They have to get the customer back. The fundamental change?? How they go about doing that..... Or do they fail? I can't think of a worse problem to have to deal with.
|