In his first "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer spoke with Todd Penegor, president and CEO of Wendy's (WEN) , the fast-food chain.
The company just posted a 5-cents-a-share earnings beat with a 13% increase in same-store sales.
Penegor said he's very excited about Wendy's growth in the breakfast category. Beyond breakfast, Penegor noted that new product innovations are also driving growth, as are popular chicken sandwich options.
When asked about capital allocation plans, Penegor said Wendy's will always invest for growth, but also keep an eye on its dividend as the company continues to reward shareholders.
Finally, Penegor reaffirmed Wendy's commitment to 100% sustainable packaging by 2026.
We looked at WEN back on March 4 and wrote that "The charts of WEN have weakened since our review on Monday. Continue to avoid the long side."
In this updated daily Japanese candlestick chart of WEN, below, we can see that prices quickly made a low after our March 4 review but only moved sideways until April. A rally developed in April taking prices back above the 50-day and 200-day moving averages. WEN traded sideways in early May but the indicators weakened.
Notice how the On-Balance-Volume (OBV) line weakened a little before Wednesday's large red (bearish) candle? The Moving Average Convergence Divergence (MACD) oscillator had already crossed to the downside for a take profit sell signal. Interesting.
In this weekly Japanese candlestick chart of WEN, below, we can see how this latest weekly candle shows a large upper shadow as traders rejected those prices. This may have been influenced by weakness in the broad market but in the end it doesn't matter. The weekly OBV line appears to be curling over and the MACD oscillator may briefly cross the zero line.
In this daily Point and Figure chart of WEN, below, we can see that prices reached a target of $23.
In this weekly Point and Figure chart of WEN, below, we used close only prices with a traditional even dollar scaling. Here the longer-term forecast is for gains to the $49 to $50 area. That's a lot of chicken sandwiches.
Bottom line strategy: WEN looks a little vulnerable in the short run but the weekly Point and Figure chart is very bullish. If WEN pulls back and holds the $21.50 area I would consider it a buying opportunity. Risk below $20.50.