The story of MCD growth in stock value is not over.
On March 8th, I entered a buy for MCD at 74.23, this morning at 8am and 50 seconds, that trade executed. I now have 50% of my target allocation in MCD.
McDonald’s is a long term buy and hold. I believe that MCD with its international presence has an excellent growth story. Despite being ‘dethroned” last week by Subway as having more locations. No big deal, MCD is the largest fast-food restaurant company in the world in terms of sales and profits, with approximately 32,500 restaurants in 117 countries generating $24 Billion per year.
International Food Designers
With that larger economic and geographic base, MCD has the ability to add a larger variety of menu items than subway
Expansion opportunities in international markets will be the greatest growth areas this year. MCDs largest growth areas outside the US are Asia-Pacific, Middle East and Africa.
Last year MCD added several drinks including frappes and fruit smoothies. The crispy chicken sandwich is probably the best chicken sandwich I have ever had. As you read this, hundered’s of food designers, chefs and marketing people are developing new menu items.
Photo: Mouse over for name of the dish.
With international markets, comes some international foods. Perhaps some day MCD will do to restaurants that Home Depot did for Hardware stores. You may be able to order a variety of foods from countries all over the world. Some menu items will appear in test markets or for a limited time countrywide (such as the McRib). Other times menu items will become full time items, like the crispy chicken sandwich was added a two years ago.
MCD is a Great Corp Citizen
Yesterday, MCD announced that it will contribute to the Japan disaster relief efforts with a donation of $2 million USD. The funds will be channeled through the International Federation of the Red Cross. MCD also has Ronald McDonald House, RMHC also supports RONALD MCDONALD FAMILY ROOMS in area hospitals, which provide respite to parents of pediatric patients; RONALD MCDONALD CARE MOBILES, which provide on-the-spot medical care for children in the community; and a GRANT/OUTREACH PROGRAM, which supports organizations that serve the well-being of children.
Rated Buy and Outperform by The Street and Credit Suisse both!
On March 8th, Credit Suisse increased target price from $87 to $88.
CS states, “we see 2-yr. trends
improving as we move past weather challenges. We still see a clear
roadmap to 20% total returns in 2011, driven by: 12% F11 EPS growth, a
3.3% div. yield, and ~1.5 turns of P/E multiple expansion.
The Street has this to say about MCD
“…strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with
reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash
flow from operations.”