McDonalds (MCD)

For the defensive investor. You get 2 themes here, the consumer and real estate. 1.) At the consumer level you have 20 states that have raised the minimum wage. 2.) This really is the biggest REIT globally. The franchisees pay rent on their properties. Dividend yield of 2.83%, and have grown it at about 8% over the last 5 years.

They have a new CEO and are doing great things. Changing menu items, value items, all Day breakfast, revamping stores, etc. A little rich on the earnings valuation at 22X. Same-store sales are close to 6%. Dividend yield of 2.91%.

A great company and a leading innovator. As a company, he really likes it, however it is just way too expensive. Trading at about 22X. 2.9% dividend yield. You aren’t going to get hurt holding this.

He likes that they have taken the bull by the horns and understood that they have been an underperforming asset. In the short term, that has had some benefits. The All Day breakfast has been a huge hit, but deep down he has his doubts if this is going to carry the company to a new and exciting future. Also, the valuation is not cheap.

This went through a few difficult years. A great company and you get 5%-10% dividend growth going forward. They have repositioned the business since the beginning of 2015. Streamlined the menu and introduced all day breakfast. You will probably see low single digit revenue growth and close to double digit dividend growth. Dividend yield of 2.9%.

Have had a miraculous recovery and the stock price is up 20%. At this stage, the problem of low growth and cost control really hasn’t been solved. Longer-term they still have to deal with eating habits, and at this stage he doesn’t think they really know what to do.

Restaurant stocks in the US have been struggling for the last year. This one is positioned very well. They are innovative and have been moving to a healthier menu over the past couple of years. Very well liked internationally. He would buy this on any pullback.

(Market Call Minute.) Still posting negative comps, and yet because they are getting better it is being priced in the market.

(A Top Pick June 5/15. Up 37.16%.) There was a lot of pessimism priced into this company, and they have had a few things go their way. The main one is Steve Eastbrook who took over the business, and understands that the company needs to have a clear identity, as opposed to just being a generalist. Don’t expect the same upside. Pays a great dividend. Has a low beta.

He would not short it. It has had a very powerful break out. It might be a little over extended. Don’t stand in front of a frieght train.

(A Top Pick April 21/15. Up 39.87%.) Has a good board and a very well-run organization. Good dividend. They are growing same-store sales. A little concerned that they are using a lot of debt to buy back stock and increase dividends. Thinks they can keep going.

He did well when it was a top pick a year ago. It is good if you have a balanced portfolio. They have turned things around with the new menu, delivery and the apps. The beta is 0.6 so it is half as volatile as the entire market. You can live with it in the bad times. This allows you to be in the market, but not lose sleep at night.

(Market Call Minute.) The stock has done very well, but is quite expensive. There are other names in this space that are more attractive. They are expanding in China which is a positive.

(A Top Pick April 1/15. Up 35.91%.) Bought this in the low $90 when it wasn’t well-liked. There is good board involvement. They have had positive menu changes. 3% dividend yield.

(A Top Pick March 5/15. Up 24.2%.) New CEO has been juggling up the menu and opening up new McCafes, and the stock took off.