McDonald’s Corporation (NYSE:MCD) is back. Well, at least it seems that way when you look at the past couple years of performance for MCD stock.
From $115 in the early days of 2016, to trading at $177 today, that is impressive performance for any company, much less a retail food business in a recovering global economy.
Yes, the U.S. is its largest single market, but MCD only derives about a third of its revenue from America. The other two-thirds comes from beyond the borders. And that means the health of the global economy is a key factor to MCD stock’s continued growth.
Also bear in mind that in many places around the world, McDonald’s food isn’t just cheap fast food, but a special outing for family or friends. The Big Mac Index was invented by The Economist magazine and it shows the purchasing power of an economy based on the price of a Big Mac.
There’s also the statistic of how many hours of work at minimum wage it takes to buy a Big Mac in various countries. Here’s a chart from a couple years ago.
The point is, MCD has firm foundation in the world of consumer dining. It’s in the top 10 consumer brands in the world, according to Forbes. Yet just a few years ago, MCD stock seemed doomed.
It was no longer trying to keep with changing palettes and dining trends. It was getting dangerously close to ignoring its base and allowing insular corporate branding to stay safe and consistent.
How MCD Stock Is Making a Comeback
Fortunately, a change in leadership along with some vocal stockholders got this burger behemoth back on track. And now it’s tearing up that track.
Reshuffling its menu offerings, has been a big hit and adding fresh, quality beef to select burgers has been paying off. It’s also planning on launching a vegan burger and a new, exclusive soft drink developed by Sprite, called MIX.
These types of menu changes will allow MCD to draw in customers its traditional menu hasn’t really catered to in the past. Also, given these unique items, the prices are likely to be higher, which will help boost MCD margins. And growing margins in this low margin sector is a big deal.
Also, 2018 should see a growth in technology-enabled ordering and services. MCD is hoping to roll out mobile ordering to 20,000 of its restaurants by the end of this year.
So, after two solid years of growth, is the run over for MCD stock? Not a chance.
Granted, so far this month it hasn’t done much, although its 3% rise would be in line with the kind of growth it has seen annually for the past couple years. On Jan. 30, its Q4 results will be posted and they should be just as strong as its previous quarters.
That kind of growth, along with its rock-solid 2.3% dividend will keep the Golden Arches untarnished for quarters to come.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.