Nike and McDonald’s Lag the Dow, While This Stock Stands Out as October’s Best Choice

Key Points

• Nike and McDonald’s are both facing headwinds in consumer discretionary spending.

• Nike’s difficulties run deeper, with the stock in a multi‑year decline.

• McDonald’s is losing ground to a resurgent Burger King.

It’s been a difficult year for the Dow Jones Industrial Average (DJINDICES: ^DJI) consumer sector. Through Sept. 24, the blue‑chip index is up 7% for the year, yet Nike (NYSE: NKE) and McDonald’s (NYSE: MCD) rank among the three worst performers. Nike has dropped about 44%, while McDonald’s is down roughly 22%. IBM, the second‑worst performer, is off 23%.

Why Nike and McDonald’s Have Tumbled This Year

Both companies are iconic American brands, each leading its industry—Nike in footwear and apparel, McDonald’s in fast food—and both have historically delivered strong returns. Their recent declines, however, stem from very different challenges.

Nike’s slump is long‑standing. After peaking during the pandemic, the share price is down roughly 80% from its all‑time high. The sneaker giant struggled under former CEO John Donahoe’s aggressive digital‑first push, which alienated key wholesale partners and allowed competitors to capture shelf space. Successive leadership under Elliott Hill has not reversed the trend, as the business contends with tariff pressures, a difficult Chinese market, and sector‑wide weakness that has also affected peers such as Lululemon, Deckers and On Holding.

McDonald’s headwinds are more recent. The stock reached a new high earlier this year, but disappointing earnings and slowing growth have weighed on the share price. In particular, McDonald’s is ceding market share to Burger King, whose turnaround—highlighted by an improved Whopper and store remodels—has delivered same‑store sales growth of 8.5% in the U.S. in the second quarter, compared with just 0.3% for McDonald’s.

Image source: Getty Images.

Which Is the Better Buy for October?

At its recent Investor Day, McDonald’s unveiled a $8.5 billion, 10‑year plan to modernize its restaurants, boost operational efficiency, expand its chicken and beverage offerings, and improve margins. Although the announcement triggered a 5% dip as investors focused on near‑term sales guidance, the company’s proactive response to competitive pressure is viewed positively.

By contrast, Nike’s turnaround initiatives—codenamed “Win Now”—have yet to produce measurable results, with revenue growth remaining flat and analysts projecting modest earnings recovery. The stock’s steep decline has eroded profitability, leaving limited upside despite the lower price.

McDonald’s, however, remains solidly profitable and trades at a price‑to‑earnings ratio of about 19, its most affordable level since the pandemic dip. The combination of a clear strategic plan, stronger cash generation, and attractive valuation makes McDonald’s the more compelling pick for investors seeking exposure to a resilient brand with a viable turnaround path.

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