Have you ever wondered why flying an airplane requires certification while practicing fundamental and technical analysis does not? Obviously, misreading the altimeter may have disastrous consequences far beyond that of misinterpreting earnings and chart signals. However, one of the key distinguishing factors — beyond safety considerations — is contingency or lack thereof, which, in a roundabout way brings us to Kraft Heinz (KHC).
From a near-term trading perspective, I’m bullish on KHC stock. However, my argument is based on a non-contingent empirical observation. In other words, I’m able to answer the five words no analyst wants to hear: how do you know that?
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On surface level, skepticism toward the bullish narrative of KHC stock is more than warranted. According to the Barchart Technical Opinion indicator, Kraft Heinz is rated as an 88% Strong Sell. Analysts overwhelmingly rate KHC as a consensus Hold, with only two experts out of 22 expressing a directly optimistic view. Finally, options traders don’t seem particularly enthused, with KHC’s total options volume on Monday landing at 25,183 contracts, which was 17.34% below the trailing-month average.
Some fundamental analysts might point to KHC stock trading at a trailing-year earnings multiple of 22.43, which is lower than the multiple of 27.67 back in December 2024. It’s at this juncture that the reader would have to ask: how do you know that (a P/E ratio of 22.43 is “good”)?
A technical analyst might point to KHC stock being down 16% year-to-date as evidence that the security is due for a comeback. But again, the reader would have to ask: how do you know that (sustained red ink will lead to a reversal rather than a continuation of volatility)?
Anytime you come across a claim, you need to ask consistently, relentlessly: HOW DO YOU KNOW THAT?
If the answer is unsatisfactory, it’s not good analysis. In fact, it might not even be analysis at all.
Pivoting Away from Authorial Assertions to Data Science for KHC Stock
One of the scariest implications of the fundamental and technical approach is that the premise and the conclusion are contingent and self-referential. From an epistemological framework, it’s incredibly difficult to distinguish between a traditional market analysis and an acute episode of irrationality. Because the validity of the approach is observer-dependent, the goalposts are constantly shifting due to unfalsifiable claims.
