This short and quick article is intended to alert those who have been waiting for a pullback on McDonald's Corporation (MCD). The stock has been on a tear lately, as indicated by the price chart shown below. A lot of investors, including us, have been patiently looking at initiating a new position or to add to existing ones. We might have a good opportunity today and in the next few days.
- Bad news for the firm is good news for investors: Today, it was reported that the company's same store sales growth for February fell behind the analysts' estimates. The stock reacted by going down to as low as $96.46 at the time of this writing. People who have been in the market for a long time know and agree with the notion that temporary bad news for a good firm is good in the long run for investors.
- RSI: In a recent article we noted Philip Morris (PM) was overbought based on RSI. In sharp contrast, MCD's RSI shows it is nowhere close to being overbought and may even be underbought, as indicated by the RSI chart below.
- Higher Entry Yield: At current price of $96.46, the stock yields almost 2.9%. Another slight pullback to about $94 will give it a current yield of 3%. Also, we are almost sure to get a dividend increase in November 2012. So even at the current price of $96, the upcoming dividend increase will yield more than 3%, based on its dividend growth history.