McDonalds (MCD)

Stock has really underperformed this last year. A lot of people are focusing on their growth, which has slowed down a little. Valuations are starting to look a little more attractive, but still not attractive enough for her.

He has YUMS. The question of fast food is still in its infancy in world markets. Their innovation in the menu area is a concern. A safe place and a great stock with long term growth potential.

Longer term it is known to be the company that raises its dividend. He is concerned about it adapting to the generation that prefers healthier foods. They are making renovations but can they meet that new generation in terms of demand. Price promotions are very aggressive in their space. He owns YUM brands and likes SBUX

$99.20 Model price, 4% upside. Pilled back nicely to EBV +6. You have great support there. Get it on a rally if you want to sell it, thinking it is dead money. There is better value elsewhere, but it is a quality company and will .move up with the S&P.

We have seen underperformance in this name, ever since the days started getting longer, in December. You can accumulate this. Europe is still a major part of their revenue and it has been lagging but is turning around now.

Even though it is a discretionary type stock, it has gotten thrown in with consumers’ staple type stocks and the stock has come down a bit. Right at the 200 day moving average so he would see where it goes from here because that is an important inflection point as to whether it is going to go up or down. A great dividend grower over time. Their challenge today is catering to today’s generation which is slightly more health-conscious.

(Top Pick Aug 13/12, Up 14.82) He has exited and rotated to Starbucks (SBUX-O), which is getting very good same store comparables. There isn’t a problem with MCD. They are basically a REIT because they are getting rent from franchisees. SBUX is a better opportunity.

Great brand. Struggled a little bit on their same-store sales but their track record of investing capital is impressive. Have lots of things working for them. What doesn’t inspire her is the valuation on the shares. Because it is a sort of “steady Eddie” business, there has been a shift in investor confidence with people getting more comfortable with the market so they are being put into stocks that are considered safe, such as this one. She doesn’t see a lot of compelling upside.

Just had an earnings miss. From a practical point of view, this has been a wonderful franchise, especially in the English section part of the world. Thinks they struggle to get the growth internationally. Longer-term, he feels this is a challenged franchise but it will continue to grow and continue to do well. Not in the right sweet spot to be a big grower and is challenged to grow in Asia. Yum Brands (YUM-N) would be a better alternative.

(A Top Pick Aug 20/12. Up 13.98%.) Bought this on a dip. This was followed by another dip in the fall and now we have another one. All of those were on slight earning misses. It is still innovative and is about 40% to Europe, which means Europe is now a positive. Still likes.

Looking at the chart, something concerns him. Since about April it has been forming a technical formation of lower highs and lower lows. They have done very well obviously going through a transformation in terms of restaurants, etc. You are paying up a little bit at 18X earnings. However, it gives you a lower beta with a higher dividend.

(Market Call Minute.) Great company but has always been a little too expensive for him.

This has been on his watch list. They are exposed all around the world. Have good opportunities for growth in the emerging markets. Have done a pretty good job of restructuring their business and trying to grow same-store sales. He prefers companies with a little bit faster growth.

Would be interested in picking it up in the $90 range. This is a difficult company to grow. They need to trim the menu down. You could own this over a several year period.

(Market Call Minute) Decent yield but difficult environment.