Investing in the Golden Arches

McDonald’s Upgraded to Buy at Janney on Higher Sales Estimates

It’s been a rough couple of months for McDonald’s Corp. (MCD). Its stock is down 6% since mid-October, and its last set of same-store sales, for October, saw a global decline of 1.8%, and domestic drop of 2.2% — its first such drop since 2003. But that hasn’t deterred analyst Mark Kalinowski at Janney Capital Markets, who on Friday upgraded the fast-food chain’s stock to Buy, and raised his November U.S. same-store sales estimate to 1.7% based on proprietary research. Kalinowski also raised his December estimate to flat.
Comments: We have McDonald's in our brokerage account and in both my and Kathee's IRAs. Investing in them is not an endorsement of every menu item, but I can tell you that we occasionally will eat at McDonalds. Almost always on a road trip we will stop at McDonald's for either breakfast or lunch. And at times when I work from home I will go through the drive-in for lunch. We like it because:
  • The mass appeal
  • The quality of their product
  • The seeming efficiency of their restaurants
  • What we perceive to be friendly, customer-oriented staff
  • And it pays a 3.5% dividend
Associated articles and links:


  1. Motley Fool: This Restaurant Chain is a Long-Term Buy:

    Even with the recent slowdown, McDonald’s has still been a market leader in the quick service restaurant market for more than 5 years. It even increased its US market share from 46% to 49.6% from 2006 to 2011. The second largest player in the market, Wendy’s was much further away with only 12.3% market share in 2011.

  2. WSJ on 12/10: McDonald's Sales Top Forecasts

    McDonald's has largely been able to boost guest traffic and sales faster than most of its competitors with its expanding global operations and increasingly diverse menu, such as higher-margin products like blended-ice drinks.

  3. 12/10: McDonald’s Comp Sales Rebound, Led by America’s Support

    Comment: McRib is returning (I've still not had one)

    In a press release, the company said one of the factors in November's numbers was the limited-edition Cheddar Bacon Onion sandwiches. With those, McDonald's lets customers choose between chicken and beef as the main topping.
    McDonald's stock generally has been a poor performer this year, including a run as one of the worst members of the 30-stock Dow Jones Industrial Average. On Friday, however, it got an upgrade from Janney Montgomery Scott, which had just downgraded the shares in September. The average price target on McDonald's is above $96, according to FactSet data.
    The next big news for McDonald's is only days away, with the return of the McRib just around the corner.

  4. 1/10/13: McDonalds is the Microsoft of Burger Joints

    Ray Kroc & Co. built a scalable system that has come to define both in the minds of many. And over the decades, McDonalds has had a rare talent for adapting its menu to changing consumer tastes. The Happy Meal, Chicken McNuggets, and McRibs were only the beginning. As Americans became more health conscious, McDonalds started selling salads for the parents to eat while the kids played on the playground. And as Americans have gone upscale in the coffee drinking habits in recent years, McDonalds stole a few plays from the Starbucks (Nasdaq:$SBUX) playbook by launching its McCafe concept.


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