Zulily Rebounds, Potbelly Sinks As Dow Notches Record High

McDonald's shares tick higher on upgrade despite last quarter's weak U.S. sales

May 13, 2014 at 6:10PM

As investors, we try to keep a finger to the wind, testing the gales of the economy for signs of what tomorrow will bring. While this helps us to develop our own forecasts, sometimes a finger to the wind doesn't offer us much new information. The economic data brought to light on Tuesday didn't tell the market anything overwhelming, as retail sales in April logged a 0.1% increase over March. With nothing major to go on, the Dow Jones Industrial Average (DJINDICES:^DJI) edged slightly higher, adding 19 points, or 0.1%, to end at 16,715. 

Although the Dow wasn't wildly volatile today, its modest gain was enough to earn it an all-time closing high, a feat that McDonald's (NYSE:MCD) helped it to achieve. The stock's 0.7% gain today was aided by a price target increase from UBS, which gave shares a $120 target. The investment bank said it sees an opportunity for McDonald's to improve its U.S. same-store sales numbers, which I must agree with. Same-store sales in the U.S. were terrible last quarter, down 1.7%. If you're looking for a low-risk, long-term, income-generating stock, McDonald's is a good bet, but brace yourself for disappointment if you're counting on super-sized returns in the short-term. 


Source: Motley Fool flickr

Elsewhere in the restaurant industry, Potbelly (NASDAQ:PBPB) shares slumped 5.1% on Tuesday as the stock continued a steady decline that began shortly after the company went public last October. While an investment in the $450 million Potbelly is far more likely to double or triple in worth before an investment in the $102 billion McDonald's does, investors assume far more risk with the sandwich chain. Even after Potbelly beat quarterly earnings estimates last week, colleague Michael Lewis delved into several compelling reasons why investors should approach the stock with caution.

Lastly, shares of Zulily (NASDAQ:ZU) were flying high on Tuesday, tacking on 4.8% in trade. The stock certainly gave itself some room to recover from its 35% slide last week, a sell-off predicated by first-quarter results from the flash-sales site. Revenue soared 87% in the most recent quarter, but the company actually posted a slight loss in the period as it struggled to fulfill demand. Higher-than-anticipated demand isn't a bad problem to have, but it's a problem nonetheless, and a clogged sales pipeline threatens to back up orders and leave customers unhappy, which would create a much larger problem. Tomorrow marks the end of Zulily's "lockup period," which could put pressure on the stock as insiders are allowed to sell their shares.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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