McDonald's Looks Fried

Value investing isn't just about being able to identify which stocks are the cheapest. It's also about weeding out cheap-looking stocks that are potential disasters. Such is the case with McDonald's (MCD Quote).

Folks, don't get me wrong. On the surface, Mickey D's looks like a bargain. I mean it has a stellar operating history, and it trades at less than 15 times forward earnings. But looks can be deceiving.

Just take a gander at the company's latest financials and you'll see what I mean. Even a better-than-expected second-quarter earnings report can't hide the fact that the underlying numbers are softening. Meanwhile, the company keeps throwing money at share buybacks -- and the stock keeps falling. ...