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I still like Ronald McDonald

May 20, 2011 11:34 AM ETMCD
Jim Van Meerten profile picture
Jim Van Meerten's Blog
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 I like 

McDonalds (MCD)  as a company and I like Ronald McDonald as a mascot.  What is it about the radical left in the US that makes them target success as bad?  They hate Wal-Mart because they revolutionized retail and bring you the lowest prices.  The hate Google because they have brought to the masses information at your finger tips.  They hate the banks because they bring financing to the public and hate Wall Street because public ownership of business is evil.

Lately they claim McDonalds makes kids fat.  They want to ban toys in Happy Meals and now they target Ronald as some kind of evil clown out of a Stephen King novel.  Get a life.

McDonalds amazes me.  I know that an immigrant can be off the boat and the next day make a better hamburger that you can get at Mickey D's but they still sell more than anyone on the planet.  They sell more hamburgers, sell more breakfasts, out sell even Starbucks when it comes to coffee and now target smoothie drinks.  No matter what food item they take on, in short order they are number 1.  Nothing succeeds like success and that is what they do.

I foundMcDonalds (MCD) when screening on Barchart to find the S&P 500 companies hitting the most frequent new highs in the last month.  I'd buy the stock on price momentum alone.

For those of you who don't know: McDonald's Corporation (MCD)develops, operates, franchises and services a worldwide system of restaurants that prepare, assemble, package and sell a limited menu of value-priced foods. The company operates primarily in the quick-service hamburger restaurant business. All restaurants are operated by the company or, under the terms of franchise arrangements, by franchisees who are independent third parties, or by affiliates operating under joint-venture agreements between the company and local business people.  This year they will open 750 new locations -- that's more new locations opened in one year thant most fast food chains open in a life time.
Factors to Consider:
Technical Factors:
  • 96% Barchart technical buy signal
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 18 new highs and up 4.82% in the last month
  • Relative Strength Index 74.35% and rising
  • Trades around 82.30 with a 50 day moving average of 77.26
Fundamental Factors:
  • MCD is a Wall Street darling and a core holding in most brokerages model growth portfolios
  • Brokerage analysts have released 8 strong buy, 8 buy, 9 hold and no sell recommendations for their brokers to push to clients
  • Sales are projected to increase by 9.30% this year and another 5.50% next year
  • Earnings are forecast to increase by 10.60% this year, another 9.20% next year and continue by an increase of 10.32% annually for the next 5 years
  • All this growth and a 3.30% dividend that is only 50% of net earnings
General Investor Sentiment:
  • This is one of the most widely followed stocks on Motley Fool with over 6,549 readers expressing an opinion on this company
  • The CAPS members vote 4,989 to 274 that the stock will beat the market
  • The more experienced All Stars agree with a 1,234 to 50 vote for the same result.
Summary:  With over 65% of their sales coming form non-US locations this company is poised to benefit from the turnaround of the world-wide economy.  McDonalds (MCD) has current upward price momentum, a history of growth and earnings success, pays a decent dividend and still has room to grow until they make everyone in the world a customer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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