Burger King (BKW) has been in decline since shortly after our June 11 Alert to subscribers that presented BKW as a possible short candidate due to its inverse correlation to the seasonal rise in beef prices. BKW’s decline has gathered some momentum ahead of its July 31 report on second quarter results. BKW was also beginning to exhibit declining revenue, perhaps due to recent steep discounting. There is also some formidable competition in the space and folks tend to grill more burgers at home over the summer in lieu of visiting fast-food burger joints.
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BKW was shorted in the Almanac Investor Stock Portfolio on June 24 at $19.89 when its slower-moving 12-26-9 MACD histogram turned negative. We have employed a 10% stop loss. BKW is still a viable short candidate as the seasonal rising price pattern for beef is the longest of all our Top Commodity Seasonal Percentage Plays in the Commodity Traders Almanac, running 160 days from mid-June to early February. A continuing decline in BKW revenue and the aforementioned competition can also weigh on BKW’s stock price.
