McDonalds (MCD)

In this environment with a lot of volatility, he likes the 3.53%.dividend support. Thinks the new CEO is going to turn the business around. They say they are getting good traction in China again, and in spite of all the currency headwinds, it is a very strong dynamic franchise. Thinks the company will be much more aggressive regarding its balance sheet and increasing its dividend. Will have a lot more capital discipline in terms of how many stores they own, versus how many stores they franchise.

This has been beaten up and has low PE with a low beta. You are getting paid while you wait and not getting a name that is overly volatile. He is comfortable betting on their turnaround. They have done it before and he feels they will do it again.

This is the 1^st quarter where they actually grew revenues in quite a while. This is a very strong franchise. All of the numbers would screen well on pretty much anything she looked at, other than the ability to grow. In this interest rate environment, you want some of that growth potential, and she just doesn’t see it. This is something that she just doesn’t want to participate in.

(A Top Pick Aug 11/14. Up 8.95%.) Everyone is worried about this company and their lack of healthy choices. Look at tobacco companies. Not everybody does everything healthy. He still likes this very much. Yielding about 3.5%, which is very attractive compared to a 10 year treasury bond.

This is really about the valuation story, and he is willing to be there for the recovery. There is lots of pessimism priced in. Their sales across the board have come down because they haven’t adapted to consumer preferences. So when you buy this, you are making the bet on are they going to make the changes necessary to adapt to what consumers/restaurant goers want today. He feels the answer is yes. They have done it before. Low volatility and a dividend yield of 3.55%.

Undergoing a major re-evaluation of their business. We think of it as a hamburger chain, but in fact Egg McMuffins outsells hamburgers. They are trying to re-establish themselves. Facing some very stiff competition. If he had been looking at this sector, he would have chosen a smaller chain.

Gives a huge dividend of about 3.6%. Have grown their dividend at about 10% a year for the last 10 years. Going through some struggles right now. He has seen this happen before. A very powerful franchise and is struggling with competitive pressure, currency pressures and menu pressures. Very, very strong balance sheet.

Encouraging that they have a board that brings in a new CEO when the old one wasn’t working out. He expects the new CEO will create more localization of menu items and investing in their employees. You are getting paid to wait with a dividend yield of 3.53%.

Have had trouble over the last few years. People are concerned about management. Part of their problem now is the menu. People globally are changing their habits, and companies have got to adapt quickly.

This one has had some struggles. A new CEO coming is in. It has a 3.4% dividend. It is the largest real estate holder in the world, which few people realize.

Long on McDonald’s (MCD-N) and Short on Restaurant Brands (QSR-T). Good strategy? He could see intuitively how it could do well, but he would advise against it. This company has a lot of headwinds. It is not seen as a health conscious menu and a place where people go to eat healthy. Restaurant Brands have Tim Hortons which has a lot of growth potential and a lot of potential for cost-cutting.

Just removed the CEO. Company had been struggling, partially because their menus got too complicated. They are trying to rebrand their menus and make them simpler. Rock solid balance sheet. He thinks they are going to solve their problems. Has a 30 year track record of increasing dividends. Yield of 3.8%.

An amazing business and the Return on Capital and Return on Equity is terrific. Trading at a 15-16 times multiple. The negative is that there is no sense of urgency with management to change. Competition has increased immensely. Until he gets an indication that the earnings are going to grow, it is hard for him to buy the stock.

Had a real challenge the last couple of years. A lot of better brands have caught up. Declining same store sales on a monthly basis. There needs to be a re-think about what management is going to do going forward.

Sell McDonalds (MCD-N) to buy Apple (AAPL-Q)? McDonald’s is treated almost like a staple-like company, fairly solid and predictable growth. The only issue is from a growth point of view. It is a good franchise. If you hold it, it will continue to move forward quite nicely.