McDonalds (MCD)

Was on her watchlist for a while. Pulled back, down 15% YTD, so she added to client portfolios about a week and a half ago. Global, 100 countries, 41K units. Very profitable business model of 94% franchised. So franchisees pay a royalty percentage of topline sales plus, uniquely, rent for the buildings and land (39% of total revenue). Cashflows are visible and defensible. Yield is 2.63%, dividend increases for 45 consecutive years.

Quick service has lagged due to higher unemployment, diminishing savings, price increases. Renewed focus on value, scale helps them accomplish this.

He trimmed it last January, but wishes he had sold it all. All performance has been driven by price increases, and those days are over. Be careful here.

Shares are down 7% this year. The problem is that their menu prices rose and are too high. They need to cut prices.

His price target is $300. Has owned this for over a decade, a great dividend compounder, but he wouldn't rush into it now.

We live in a country of two consumers: those flush with money and those struggling to buy at dollar stores. MCD reported today and shares fell. Same-store sales grew 4.3% YOY, but felt pressure from the Israel-Hamas war. More pressure came from consumers who are eating at home because packaged foods are more affordable than take-out.

It reports Monday. Almost always, shares rise right after earnings and likely to happen again

Does not own shares, but watching carefully. Demand for products steady and rising. Brand is very strong across the globe. European demand very strong (long lines in stores). A.I. helping company reduce labor inputs. Ability to mesh A.I. with food industry very strong. 

It is adding more stores and raising prices by 10% which people are paying. More middle and higher income people are coming into their restaurants along with lower income customers eating there less often. It has spent 7 years improving the burgers and is now increasing the size of them. It reinvests profits more than the other chains.

It has transformed itself and has bottomed after a sell-off, consolidated and had a nice rally. It is well valued now so wait to buy at $290 

It reported today. Sales were good last quarter, but they warned about the consumer, which was spot-on.

Has owned this for 10 years. An incredible dividend grower. Will write calls on this in the $290s.

MCD is a mature fast food franchisor that is now trading at 21.4x times' Forward P/E (historical averages in the last five years range from 21.2x to 25.2x). The balance sheet has net debt of $47B, and a net debt/EBITDA of 3.2x, which is quite leveraged, but given the predictability of the business, we think it is still okay. The company has generated healthy cash flow over the years, most of which has been used for dividend increases and share repurchases. Although long-term growth may be affected somewhat due to a healthier lifestyle, we think MCD could do well over the short term given the pricing power of the capital-light business model as a franchisor, which is valuable in an inflationary environment. We would nor really be concerned about the weight loss drugs. They could even have a net positive impact if consumers believe they are healthier overall and want to 'treat' themselves. Overall, we like MCD as a solid dividend grower name, and we are okay to add some here at the current valuation.
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Very strong franchise.
Well known brand.
Share price has been flat for past year (fears of recession).
Discretionary item.
Quality name for long term investor with global assets.
Would recommend holding shares. 

He holds it in more conservative portfolios. Looking back long-term, you can't get a chart that's much better. Yield is 2.1%, which he expects to remain stable and go higher over time. Expects 6.4% dividend growth, very strong. Great balance sheet and cashflow, well run. Low beta, 3/4 that of the S&P. 

Prices are getting high, costs are going up. Be careful. For a stock like this, you have to look at topline sales. Starting to look a little toppy. If you own it, hold, but be wary of the 100-day MA. If it drops below $270, that's a problem.