Stockchase Insights McDonalds MCD-N BUY ON WEAKNESS Oct 25, 2024

It's tended to be a great when you buy this down (-12% this year). It's such a powerful brand that people can't get enough of it.

Shares fell this year, because many felt its food was too expensive. This morning, they reported disappointing same-store sales, a big sales miss and earnings miss, but shares jumped nearly 4% today. Why? The rally is broadening beyond tech/AI. Also, the street expected MCD's bad numbers, and they introduce $5 Value Meals.

Money is tight for many Americans and even fast food is now considered "discretionary" spending because prices are too high. Nobody expected this, but it's a real now. McDonald's now realizes this and will extend the $5 Meal Deal into September, says the CEO at the Q2 conference call.

Consumer staples have been performing under the radar and will continue.

He added at $250 a month ago. With inflation the lower income population shifted more to eating at home and away from fast food restaurants. McDonalds is now moving to more value priced deals and encouraging people to shift to digital offerings, apps, to increase the use of a loyalty program. McDonalds has a unique business model in that it owns the land that the franchises sit on. 40% of its revenue comes from rent from the franchises.       Buy 28  Hold 13  Sell 0

Their decision to extend their $5 meal beyond the summer was applauded by consumers and Wall Street alike as consumers are pushing back against higher prices. Smart.

It recovered a few dollars today after falling on the illnesses caused by the Quarter Pounder. We don't want that gain. Rather, we want upside on a good quarter--they report tomorrow. 

It was over bought to begin with before the recent difficulties. It is in a trading range so if it hit $260 or $270 he would buy it.

He trimmed it last year due to continued cost pressures and valuation. Is worried about sales growth stagnating and more competition.