This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Five Dumbest Things on Wall Street This Week: Feb. 1

Stocks in this article: HLF

4. Yum Cries Fowl

A batch of bad Chinese chicken cooked Yum's (YUM) goose. Now here come the vultures.

The official Xinhua news agency confirmed on Friday that chicken sold to KFC's parent Yum Brands in China contained excessive levels of chemicals. The Shanghai Municipal Food Safety Committee said KFC's checks on its suppliers were sloppy, and that it found extreme levels of antibiotics and steroids in the restaurant's supplies.

First of all ... ick! The very thought of biting into a drumstick that contains more banned substances than Lance Armstrong makes us ill.

Second of all ... ouch! Yum warned the market in early January that its China sales were being jeopardized due to its chicken-supplier problems, but we really thought it would have died down by now. This most recent report only adds to the reputational injury the fast food chain has already sustained in its largest market. Yum shares have fallen half a percent in the past month due to its China woes, even as the S&P 500 has surged almost 8%.

For the record, shares of McDonald's (MCD) are slightly outpacing the market over the same period, even though the company admitted to a similar chicken-supplier problem in China. McDonald's CEO Don Thompson said last Wednesday the chicken scare "minimally impacted" McDonald's sales in China during the fourth quarter, although it is weighing on its sales so far this year.

The drop in Yum's stock has spurred a slew of class-action lawyers -- yes, those are the vultures -- to sue the company in the past week. The lawsuits allege that Yum "knew but failed to adequately disclose" months ago both the slowdown in its China sales, as well as its chicken-supplier problems.

Honestly, we don't know whether the plaintiffs have a leg to stand on in this high-stakes game of chicken. Nevertheless, we do suggest that McDonald's beef up its supplier checks all over the globe.

The last thing Mickey Ds needs is for those ravenous class-action lawyers to have a cow over its burgers.

2 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs