McDonalds (MCD)

He likes it a lot. He is cautious on the space and is underweight right now. Restaurants and especially this one have been stellar. They have really turned around and are a hero.

This has been a fantastic performer. Without question, it is the best restaurant property in its space. Over the decades, they have reinvented themselves a number of times, from a burger/chip joint to a healthier menu. They’re also becoming much more efficient in their operations, currently franchising a large percentage of their company owned stores. This gives them higher return on invested capital.

He likes the company and it is a very resilient business. Management is world-class and are always innovating and finding ways to reinvent themselves. His concern is the valuation. Trading at 15X on an EV to EBITDA basis, which doesn’t give a lot of room for error. He would like to see a pullback before getting in. 2.3% dividend yield.

(A Top Pick Jun 13/17, Up 17%) They are engaging mobile and driving traffic. They have gone to a healthier menu and better suppliers. They are back to a growth footing.

Trading at close to 25X Forward Earnings with about a 10% growth rate. They’ve turned around their story with healthier foods on the menu. Have changed the way they do things and it is growthier. Feels the space is a little expensive and he would look at other names.

There are so many brands, it is hard to tell which one is going to be able to redefine and re-create themselves. This company has done a phenomenal job. For years they struggled with same-store sales growth. She is cautious on the consumer space, as consumer preferences change so quickly. In food space you have some new brands going more to fresh, and not the hamburgers/fries type of meals. This company has a new CEO with a new plan who has done a number of things to turn the company around. It has a 3% free cash flow yield, and there is not a ton of upside on that multiple at this point. It appears money is going to continue to flow to this company. Probably not a huge performer going forward, but probably not something you will get hurt on either.

(A Top Pick June 13/17. Up 14%.) Had an in-line quarter, but revenue numbers came in above, both in North America and Europe.

She likes it. They had sweeping organizational changes that helped pull them out of the doldrums. They got rid of the all day breakfast menu which wasn’t that good an idea. They are looking at good growth in China.

This is a stock that just keeps going up. The dividend right now is $3.61. If you go back 10 years, the dividend was $1. 10 years prior to that, the dividend was $0.15. When you get a stock that keeps on increasing dividends like that, and you get a chart like the current one, that is what you want to have in your portfolio.

This is absolutely terrifying. The stock is selling at a P/B of $110. The intrinsic value of the company is about half. They have been buying back stock, so the ground underneath has been fading away. Be careful.

(A Top Pick June 21/16. Up 34%.) This continues to fire on all cylinders. New management has brought in new initiatives, new menus, technologies in the stores. It trades at a pretty hefty multiple now.

Chart shows this had a strong move from the latter part of 2016. When you get strong moves, stocks have to consolidate a little. A strong move through 2017 means that at some point the stock becomes overbought. If so, it will probably consolidate. On this one, you probably wait until it consolidates, and then catch it on a dip.

She prefers Yum Brands (YUM-N) whose franchises are Taco Bell, Pizza Hut and KFC. McDonald’s has done well and is a good company with good standing internationally.

There was a lot of negativity around it two years ago and since then management have done a magnificent job and it has come back. All day breakfast has spurred traffic. They are tacking on mobile apps and home delivery. They brought back the $1 any drink size. It is a bit of a safety stock. Investors hide in stocks like this. You are still going to buy your Big Mac for lunch whether the markets are up or down. He is neutral on it at these prices.

She missed the boat on this. A few years ago, you had Panera, Chipotle, etc. and nobody wanted to eat junk food anymore. Then there was a big consumer shift. McDonald’s really struggled with their same-store sales. They brought on a new CEO and redid the menu, had healthier options, fancy brands and had promotions on drinks. Now they are back in business. They’ve been putting in good growth numbers in the US.