The very heart of PowerTrend investing recognizes the intersection of several powerful forces -- economics, demographics, psychographics, technology, policy and others -- that, when combined, give way to a powerful force that shifts the what, where and how people and businesses go about their daily activities. At the very core, companies, be they business-to-business (B2B) or business-to-consumer (B2C), need to respond to the changing landscape and adapt their business models. If they don’t, odds are they will shift from a once-thriving business to one that is struggling and likely to be left behind and replaced by others.
From an investor perspective, it is the companies that are able to adapt and, even better, thrive in response to the PowerTrend-generated shift that we want to own. As you can probably guess, we want to avoid the ones that are vulnerable and likely to be left behind.
Oftentimes, making the change can be difficult, painful even, and we have to accept that not all companies can make the change and that some will fail while trying. Most will struggle as they try to change.
Let me share an example with you.
It’s no secret that McDonald’s (MCD) has been having a tough time during the last several months. The company once again reported disappointing same-store sales for the month of February. In the United States, the company blamed some of the negative comparison on the harsh winter weather we had during February.
What I found most interesting was the following, tucked inside the company’s February same-stores sales press release: “Across the segment, McDonald's priority remains building guest traffic through improved restaurant operations and customer service, relevant menu news, and strong consistent value offerings to regain momentum.”
“Improved operations and customer service” sounds good, but I think most people would rather have tasty menu items at affordable prices rather than “relevant menu news.” Competitors ranging from Burger King Worldwide (BKW) and Wendy’s Company (WEN) to Arby’s, Panera Bread (PNRA) and Yum! Brands’ (YUM) Taco Bell and KFC, among others, are shaking up their menus to drive customer traffic.
Chris Versace is the editor of PowerTrend Brief — a FREE, weekly electronic newsletter. He also writes PowerTrend Profits, a paid monthly newsletter that helps individual investors profit through buying shares of companies poised to win big in the 8 PowerTrends, as well as writes the PowerTrader trading service that seeks to deliver short-term gains using stocks, ETFs and options. Chris has been ranked an All Star Analyst by Zacks Investment Research.
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