McDonalds (MCD)

(A Top Pick Jan 29/16. Up 8%.) The idea was that this was trading at such low levels. He started buying at about $100. The company needed to go through a transformation, and he had confidence they were going to do that. Sold his holdings. A lot of the easy money has been made and it is trading at fair value now.

(Market Call Minute.) If you are going to look at a quick service company, this is probably the one to look at.

It has done very well. But she prefers Yum Brands in that space. She holds both the companies after YUM split. MCD-N has brought in some growth with menu innovation. They have room to grow outside of the US, but YUM China is a more direct play. MCD-N is probably fairly valued.

(A Top Pick Jan 19/16. Up 7.71%.) He would own this today, but prefers more economically sensitive sectors now.

Starbucks (SBUX-Q) or McDonald’s (MCD-N)? He likes both. Has held this in the past, but sold it about a year ago, primarily because he felt he had capitalized on the 1^st leg of the recovery. The share price has retracted since then, and he is taking a very close look at it and possibly stepping in again. This has a better yield and a better price to earnings ratio.

The numbers going to fast food restaurants is going down. All the McDonald’s are being automated. By taking people out, their labour costs are going down. It has probably had too much of a run for him and not enough dividend. He wouldn’t invest in this, but wouldn’t discourage people who want to. Dividend yield of 3.1%.

They’ve decided breakfast works, so they are going to make all day breakfasts. He is wondering why the market is rewarding them so fully for that. It is not a cheap valuation, so he would pass on this, until they come up with something that brings in more people.

The fast food restaurant industry is very competitive. This stock has been struggling lately, which was partly on changing tastes in the US, and on diminishing returns. These companies sometimes get growth on product cycles, and they got them for a while on global expansion, but this is a very mature fast food company that exists globally now. They might have a few more places to expand, but fundamentally their business growth should be tied generally to the economic growth where they exist.

This had a great run up. He sold his holdings in June at around $123. Had felt the juice had been squeezed in the early part of their recovery. There is no question this company is on a better path than a year ago, but feels a lot of that has already been priced in. If there was some weakness such as a 10%-15% pullback, or a catalyst for another leg up and share price, he would be a buyer.

Very intriguing about 1.5 years ago when the stock was $90 a share. It has had a great rally. Have done a lot of cost cutting, brought in a healthier product line, and brought in the All-Day breakfast. That is now priced into the stock, and now we are back into just same-store sales. The stock is fairly valued right now. It is a dividend grower which he likes. He would like to see a little more visibility on what is ahead on new menu options, etc. He owns a small amount.

(A Top Pick Sept 17/15. Up 22.92%.) Sold his holdings. Still likes the name, but when you make that kind of money in a year, you take a hard look to see if the growth or the future upside is nearly as compelling. He went into another food retailer. Still a safe name to hold, but not a lot of upside in the near term.

The underlying stock has a pretty good earnings growth profile and it gives you a reasonable dividend. It is certainly positioned internationally.

Everyone can own it. It is a great company. It has always produced consistent return on invested capital. It is very good and very sustainable. When the return on capital is rising you want to be in it and when it is dropping you want to get out. It is just starting to turn over, so wait for a better time to buy it.

Largest restaurant chain in the world by sales. It has repositioned itself in the last year or so, so the stock has done well. You get a nice dividend and PE of 20 times earnings. They offer all day breakfast which is a home run for the stock. He likes it.

Had a great run for the last year or so when the new CEO came in and turned things around. The all-day breakfast has been a phenomenal hit for them. Now that it is trading in the low 20s multiple, the question is how much can it really keep growing and how much of margin expansion opportunities are there for them in their core market of the US. The question is, what is their next trick?