McDonald’s Oversold at Seven Month Lows

McDonald’s shareholders may not be loving it at the moment.

However, that may not be the case for long, as the stock becomes aggressively oversold at a seven-month low.  All after the company fired CEO Steve Easterbrook over an inappropriate relationship with an employee.  The company’s board determined that Easterbrook “violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee,” as reported by Fox Business.

However, it appears a good amount of negativity has been priced into the stock.  

Technically, relative strength, MACD and Williams’ %R are all telling us shares of MCD are excessively oversold.  In addition, analysts don’t appear greatly concerned about the new CEO.

RJ Hottovy, consumer equity strategist at Morningstar, as quoted by CNBC just noted:

“I’m pretty comfortable with Kempczinski as the new CEO. He co-authored a lot of the velocity initiatives that Steve Easterbrook put in place. He was a big proponent of the fresh beef initiative the company rolled out. Honestly, he did a lot behind the scenes with delivering digital so I think we’ll see a lot of continuation of Steve’s initiatives with Chris at the helm.”

In short, there may be too much fear in shares of McDonald’s.

As Warren Buffett has often said, “a climate of fear is your friend when investing; a euphoric world is your enemy.”  And of course, we all remember his advice to “be fearful when others are greedy and greedy when others are fearful.”