What's In YOUR Egg McMuffin?

In many ways I find it wholly interesting that McDonald's is beginning to suffer a bit recently since, during the worst days of the economy, McDonald's stock actually held up fairly well. I even owned it through much of that period and I was never dissatisfied with the performance of the stock.

In the worst economic period since The Great Depression, people flocked to McDonald's stores for their coffees, burgers, and of course for their world famous French fries.

Lately McDonald's has come under a bit of fire with people questioning what is actually IN McDonald's menu items? Is it a health trend, or is it something more? Either way, McDonald's is making efforts to inform the public about their products, their processes, and even dispel some myths about what's actually in their food. Quite suitably they have turned to Grant Imahara, one of the former stars of the popular TV series Mythbusters to do some exploring, releasing videos and giving consumers an inside look at how McDonald's food eventually makes it over the counter and into your mouth.

The latest one is about their famous Egg McMuffin, with perfectly round shaped spats of eggs that fit perfectly onto each and every Egg McMuffin breakfast sandwich they serve. Truth is, ladies and gentlemen, while it turns out that their French fries contain about 19 chemicals and ingredients, their eggs are simply, well...eggs.

How do they get that round shape? Being one who has spent a little time in the kitchen, this one actually never seemed to be much of a mystery to me. Put an egg in a round form and cook it and voila! You get a perfectly round and uniform cooked egg. But many people had some different ideas about this, with some even suggesting that the eggs were actually cooked into a tube form and then sliced for the sandwiches.

I actually found this one quite comical.

I think McDonald's is doing the right thing by letting consumers know what goes into anything they eat at a McDonald's restaurant. As to the lackluster sales at McDonald's stores? Personally I do not think it has a thing to do with questions about McDonald's food, but rather it is simply a natural result of an improving economy. Remember that McDonald's did quite well during the recession. Part of that was due to its economical menu, such as the value menu items.

Any time an economy begins to show signs of improvement, one of the first things to change is where and how people decide to spend their money. In other words, people begin to treat themselves. That means people will begin to look for slightly higher end restaurants to eat at. Maybe they try a Wendy's, or even a place like a Jimmy John's. McDonald's simply happened to reap the benefits of being the go-to when consumers were feeling the pinch, and now that that pinch is easing a bit, people are simply going elsewhere.

I really think that's all there is to this.

McDonald's is not going anywhere, and quite frankly I do not see them coming even close to being unseated as one of the largest hamburger chains in the industry (although Subway takes the lead in quick serve overall). What they may be going through now is not outside of their history as a company. They have experienced little breaks in their company's performance in the past. Believe it or not there was a time when their Beanie Babies deal got them through a rough spell. After that coffee saved them. McDonald's will find their way back. It's simply what they do.

In the interim if consumers get to know a little bit more about what they eat when they visit a McDonald's restaurant, I am all for this. In fact, what I really want to know is how they make those Chicken McNuggets. If ever there was a mystery to solve, for me, it would be that one. Maybe Grant Imahara has something in the works on that one? Who knows. Either way, I think this is an interesting time to see how McDonald's reacts to consumer concerns over their food, and what new idea they will bring together to save their quick serve chain once again.

 

 



 

 

Tim Owens Steps Down As CEO of Drinks Americas (DKAM)

There are those funny moments. You know, like when the lottery is at an astronomical jackpot and you find yourself clacking away at the calculator trying to figure out what you'd reap if you actually got lucky enough to be the winner of it all.

Tim Owens, former CEO of Drinks Americas Holdings which has a connection with Mexican beer maker Cerveceria Mexicana, and distributes Day of the Dead craft beer among a few other brands stepping down, opens me up to one of those moments.

I love beer, man.

Earlier I was writing about the success of The Boston Beer Company and the one thing that makes Samuel Adams a great brand, and The Boston Beer Company a great company. It's Jim Koch and his love and passion for making great beer.

He's also quite keen on how to effectively run a company. That helps greatly too.

Drinks Americas Holdings has made some decent inroads getting its beer into various retail outlets such as The Fresh Market, Kroger, Walmart, and Walgreens. Even some 7-Eleven stores have taken to stocking Day of the Dead craft beer. When you're small, this is a big step. Unfortunately the company's stock price has suffered, and the company has had difficulty really turning the Day of the Dead brand into something spectacular.

I think it can be.

But that will take the leadership of someone like a Jim Koch. Someone who has a passion for beer, and who knows how to both bring that beer to market, and turn Drinks Americas into a strong player in its industry.

Day of the Dead and Drinks Americas has been a story more than 6-years in the making in a sector of the brewing industry that for many other companies has been the fastest growing sector for a very long time. When you are in beer, and enjoying double digit growth, that's something to be happy about.

So why hasn't Drinks Americas gotten there? I think, and while I am not begrudging Tim Owens, that his guidance simply was not enough to drive the company forward. His reasons for leaving were disclosed as "concerns over health issues." But I tend to think there is more behind the scenes that is happening that lead Mr. Owens to his decision than is being told.

Most of the Board of Directors is gone aside from Moreno, who is now the interim CEO of the company.

What is says to me is that there is sea change occurring. And I think with the inroads already made, fresh blood might be exactly what the doctor ordered to take this company to the next level.

It won't be easy. In order to attract talent at the CEO level you need to lay an attractive enough offer on the table. Especially if you may want to try and get someone into the CEO's seat who has a strong background with a major product launch with a larger company.

It's what made me think, just for a second. Yes. I do in fact love beer. Heck, I could probably buy the lion's share of this company and just seat myself. But what the heck do I know? I like drinking beer, and while I am passionate about the world of marketing and business, I am an investor. Not a businessman. So of course, that would not be nearly enough to take Drinks Americas to the next level as enticing as the prospect would be to at least try and do it.

I am confident that Moreno has some ideas as to where he wants to take the company next. But even still, I won't be adding any shares to my position until I know who the new CEO will be, and until I hear his ideas and get a clear view of his vision for where he plans to go with the brands and the company as a whole.

In the meantime I suppose I can sit back, crack open a cold one, and ponder the possibilities.

DAY OF THE DEAD BEER WEBSITE

Gearing Up For Boston Beer Summer Sales

It is usually right about this time every year that I start taking another look at a favorite beer of mine, Samuel Adams, and that means The Boston Beer Company. This is one of those companies that I love to own, but prefer to trade. It just seems to consistently deliver for me in the way of gains if I buy a few months before the summer, and sell it a few months before the winter.

It's beer right? And people tend to drink more beer in the summer. Stands to reason? I think so, and the results of making this trade year after year so far has at least confirmed my theory on this.

Not to mention the fact that The Boston Beer Company is also a consistent solid performer, and every year I open a new position in the company, it costs me more upfront. There is also some appeal, I think, to the fact that Jim Koch loves beer, and is passionate about his business. The result is a solid revenue base, solid growth in the business, and when you have that personal touch added in—this tends to go hand in hand with solid performance.

The Boston Beer Company also happens to be, technically, the last big American brewery since Miller, Coors, and Anheuser-Busch were all bought by foreign beer companies.

I'll be watching the stock price over the coming weeks, and will begin to open my position. I'll also be watching the put options (which I prefer to sell) to make some money on that end of things as well.

With the put options I always take a look at where I think the stock price will go, and will set my strike price well enough below that so that I can essentially keep the premium paid to me, and not have to actually buy the stock. A process that I can repeat a few times while my interest is piqued in the stock and reap additional rewards.

I also happen to like the fact that a few of my summer six packs will be bought and paid for just by owning the stock and selling options on it. Best of both worlds if you ask me.

Watching Cypress Semiconductor (CY)

Back on the 21st I wrote that sometimes you simply root for sideways stock movement, and what I was referring to were stock options, and in this case Cypress Semiconductor (CY) in which I sold some covered call options for with a February 20th expiration date and a strike price of $15.

What was the plan?

Sell the calls and hope for the stock to stay below $15. Then there is always the problem with Murphy's Law, in which, if it happens to be of any interest whatsoever to you, I happen to have a very intimate relationship with.

If I short a stock it goes up. If I go long a stock it goes down. And when I sell a covered call on a stock that has been in a trading range and sell the call above the trading range that I do not wish to sell, but simply wish to generate cash on, it breaks through resistance and goes higher than the strike price.

Ugh!

Not that it bothers me ultimately. I still make money on the calls I sold and I still was already in the money on the underlying stock. Still, once a stock does go in the money I like to try and generate that cash monthly.

At least for a little while anyway.

So I am watching Cypress Semiconductor and keeping my fingers crossed that a) it will drop below the $15 strike, but not go too far below the strike, and b) that in the meantime the buyer of my calls does not decide to exercise his options forcing me to sell my stock.

It is trading today so far at $15.37, which also by the way happens to be a new 52-week high.




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A Sinister Christmas Penguin

My wife has a thing for Christmas penguins. There are several of them throughout the house, and even one that lights up which we have outside. I of course think the Christmas penguins are ridiculous.

"What do penguins have to with Christmas?" I ask.

My wife gives me an incredulous look, "They're from the North Pole."

Of course that statement is possibly as ridiculous as I think the penguins are since most penguins are found in the SOUTHERN hemisphere. Not the Northern hemisphere where presumably the North Pole would be located.

Ahem. In any event.

One day for a practical joke I placed two of the smaller Christmas penguins in the microwave and snapped a photo which I shared on Facebook, and of course shared on my wife's timeline as well. After she posted, "Noooooooo!" she followed it up quickly with, "They will get you one day."

"I'm shaking in my boots," I responded.

Recently there has been a video circulating around which depicts an "Elf on a Shelf" sitting at a dinner table while a young man enjoys a snack. Next to him is a small pill bottle. The elf's hand moves a bit and shuffles the bottle. The young man looks at the elf sitting next to him, but the elf is still. He turns back to his plate of food and then the elf's hand moves quickly and knocks the bottle off the table. The young man jumps out of his chair and out of the camera shot.

The video brought me to tears. But then it made me think back to the exchange my wife and I had about those Christmas penguins. Most notably I recalled her warning me, "They will get you one day."

So we decided to have a little fun with the "Elf on a Shelf" video idea and make one of our own. Only this time we'd use a stuffed Christmas penguin with beady eyes and a hat with bells. What makes the video for me is the way the Christmas penguin slowly turns towards me.

My wife was the puppeteer. Although after I went back to stop the camera, my wife came out of the back bedroom. "Ready to do the video?"

Okay, that last part was made up. But it became part of the joke when I originally posted this video to my Facebook page.