We're Huge Fans Of McDonald's In This Environment

Summary

• We think McDonald's is uniquely positioned to benefit from the current inflationary environment.
• The company runs a mostly-franchised business, meaning that most inflationary headwinds on the cost front may impact its operators as the corporate benefits from higher selling prices through franchise fees.
• McDonald's offers tremendous value to the consumer, and its 2 for $2 offering is just one example. Consumers can't get enough of Mickey D's.
• We point to the high end of our fair value estimate range ($300 per share) given the momentum McDonald's seems to have in the current environment.
• McDonald's pays investors a savory ~2.4% dividend yield at the moment.

Alexander Farnsworth

By Valuentum Analysts

At Valuentum, we use discounted cash-flow analysis as the bedrock of our process. However, we also use relative valuation and technical and momentum indicators and blend that into an output called the Valuentum Buying Index rating, or the VBI

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson's household owns shares in HON, DIS, HAS, NKE. Some of the other securities written about in this article may be included in Valuentum's simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.