Burger King is going to give away "Satisfries" this weekend. But, should you pay for their stock?
Burger King plans to promote sales of its newest offering, Satisfries, by not selling them. Instead, it plans on giving it away for free.
To be sure, this gimmick won't be free forever. Satisfries will be given away just this Saturday and Sunday during "regular business hours".
The lower-calorie French fries –touted by Burger King for having 40% less fat than McDonald's fries – will be given away this weekend during regular business hours. But, before you back up a pick-up truck to your nearest Burger King drive-thru, note that they're giving away the "value size" option (priced at $1.29) and only one per customer.
Burger King launched Satisfries less than a month ago, taking aim at its largest rival McDonald's. But, it may also have been a shot at number two Subway which has positioned itself as healthier fast food.
However, over the past month, Burger King's stock hasn't been as healthy as the rest of the market. While the S&P 500 index is flat since one month ago, shares in Burger King are down 6%. McDonald's is also down over the last thirty days, but only by 3%.
Steve Cortes, founder of Veracruz TJM, says Burger King is in a good position. While casual dining names like Ruby Tuesday's are disappointing investors, lower-priced fast food shows more promise, according to Cortes. And, unlike McDonald's, much of Burger King's revenues are US-based, shielding its business from global uncertainties.
Cortes also thinks the new fries don't hurt Burger King, either.
"They have created a good bit of social media buzz about this new fry," says Cortes. "I am a fan of this stock and this move."
Yet promoting healthier alternatives may not be healthy for Burger King's bottom line. One bitter rival, Wendy's, has been promoting its Pretzel Bacon Cheeseburger since July 4, notes Talking Numbers host Brian Sullivan. Buying Wendy's stock on that date would have given investors a 42% return versus a loss of 2% for those who bought Burger King's stock instead.
(Read more: Burger King to serve free french fries)
Burger King's technicals may not be that tasty, either. "The charts aren't really consistent with thinking this has got a lot of upside," says Andrew Busch, author and publisher of The Busch Update.
Busch sees a bearish signal for the stock that has been formulating since early summer. Still, there are technical levels Burger King's stock must hit before taking on a short position.
To see the rest of Cortes' fundamental analysis and the technical levels Busch says traders should know, watch the video above.
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