On Benzinga's PreMarket Prep show, we tackle several stocks everyday and scrutinize the price action from breaking news.
Sometimes we get things right — and many times we get things wrong.
On Thursday's show, co-host Dennis Dick dissected the news on Beyond Meat Inc (NASDAQ: BYND) that all vegan bulls were waiting for: McDonald's Corp (NYSE: MCD) will be testing Beyond Meat's plant-based burger at 28 Golden Arches locations in southwestern Ontario.
Dennis Dick: Beyond Meat 'Doomed'
The news algos feasted on the news and took the issue from Tuesday's close ($138.32), which happens to be its lowest close since June 6 ($99.50), to almost $170.
Interestingly, on June 7, it bolted to $138.65 on the heels of a better-than-expected, first-ever earnings report that was released after the close June 6.
When Dick began his analysis of the issue, it was trading at $163.80, and that was after the premarket was high was put in place at $167.50. He called the move "too little, too late" and said the stock was "doomed" and would being trading "under $100 within one year."
The price of the McDonald's P.L.T. — plant, lettuce, tomato — burger of CA$6.49 ($4.90) is "way too high," in Dick's view.
"No one has a hamburger over CA$5 in Canada."
When Dick's 4-year-old son Spencer was served a Beyond Meat burger, he removed it from the bun and consumed that and the toppings only.
While many will construe the price action in the issue as a positive, veteran investors will view the price action as negative for two reasons.
First: it never sniffed the premarket high during the regular session.
More importantly, it peaked two pennies off its opening print at $160.53 and traded all the way down to $150.09 on Thursday.
The stock closed the session up 11.58% at $154.34.
Most likely, Beyond Meat found buyers from shorts that got jammed overnight or new shorts that sprung into action during the premarket spike.
Forget about the technicals in the issue; the fundamentals will tell the long-term story.
If vegans begin flocking to McDonalds to consume the P.L.T. burger, then you can bet it will be rolled out in the U.S.
But this author would not want to be long the issue in the event the plant-based burger trial meets the same fate as Tim Horton's did.
Melvin Talks Cannabis Banking Bill
Early in the show, Tim Melvin, author of "Banking On Profit," joined the crew to discuss the impact of the news that the House of Representatives approved the SAFE Banking Act, which if signed into law would be positive for the maligned marijuana sector. Investors were cautioned that many of these issues are in prolonged downtrends, with many investors deep underwater — and they may view any rally in the sector as a selling opportunity.
On Friday's show, Phil Davis of Phil's Stock World will share his views on the markets and lay out some longer-term options strategies.
PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.
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Photo courtesy of Beyond Meat.
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