I still like MCD, and still hold 1/2 of my max target position. However today MCD hit yet another 52 week high, so I felt compelled to sell some for a huge 32% gain. I’ve been holding MCD since 12/16/10, cost basis $76.99 per share and added 50% more on 3/15/11 with a cost basis of $74.00 a share.
The stock has had a fantastic runnup. Last week, when the stock was trading at around $100, I put a sell in for 1/2 my MCD shares at $102. As you can see by the chart, the stock has had a clear upward path with several 5%+ corrections. I have no set price to add to MCD holdings, I will just keep an eye on the stock and the restaurant chain’s performance.
McDonalds is set to report on January 24th.
From Dow Jones:
Wall Street Expectations: Analysts surveyed by Thomson Reuters predict a profit of $1.29 a share on revenue of $6.78 billion. A year prior, the company reported earnings of $1.16 a share on $6.21 billion in revenue.
Key Issues: The fast-food colossus had the best performing stock in the Dow Jones Industrial Average in 2011, and its recent results underscore why. Profit rose more than expected in the first three quarters of last year, with same-store sales continually rising thanks to menu innovations and restaurant renovations. It has designed a broad menu to appeal to a wide swath of consumers who have diverse value, time-of-day and nutritional preferences, and it has high-margin items like smoothies offsetting cheap fast-food staples like hamburgers. McDonald’s also has said it would boost its capital expenditures next year.
From a valuation standpoint, MCD does seem a bit pricey, with a peg of 1.88 compared to the restaurant industry average of 1.4. MCD does carry a 19.84 PE also above the industry median of $17.05.
MCD is currently yielding about 2.77%. If it ever yields 3% it will be a candidate for my retirement account, which is made up of only high yielding blue chip stocks.