Ask an expert: McDonald's recent decline
MSN Money's Charley Blaine discusses the recent weakness in the stock price of the world's largest fast food restaurant.
In this video, MSN Money's Charley Blaine explains what's behind McDonald's recent decline, as well as discusses other opportunities in the sector. There has been no shortage of news about McDonald's lately. From pushing stores to remain open Christmas Day to allegations in China it was overfeeding antiviral drugs and growth hormones into the chickens it sells in its stores there. But these don't explain the stock's poor performance.
Blaine explains that McDonald's has been hit by several factors, not the least of which are higher gas prices early in the year and consumers' concerns about going out; the weak economic situation in Europe; and increasing competition from Yum Brands' (YUM) KFC among others.
Despite all this, McDonald's retains a positive outlook, much of it stemming from the way it's conducting its operations, which have proved themselves so far, including controlling of stores, supply chain and consistency. The dividends only make it even more attractive.
And what are other promising investments in the sector? Blaine goes over several chains that still haven't taken advantage of the many opportunities, mostly internationally.
The discussion about McDonald's and the restaurant sector continues over in MSN Money's Facebook community.
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Please do not eat this food. You cannot buy a bun, burger and toppings at the supermarket for a dollar. Inferior ingredients, underpaid employees =McDonalds. How soon after you eat this food do you feel like a trip to the toilet.
A nutritionalist carried a hambuger with her for 2 years, It did not mold or loose any shape, disturbing until her dog ate it
This just in;Mitt Romney is the secret Santa passing out $100 bills at McDonald`s
in the poor areas.He cares about the little guy.
Strong cash balance and free cash flow resulting in safe dividend yield and has room to run on global scale. I think MCD has a history of being in the odd position of either being a street darling or dud. This year commodity prices and a rising stock prices have hurt it. Investors fear rising inouts and have avoided this percieved risk exposure. Further, unempoyment has a t least normalized around 8% and major indexes have risen. Those that still have jobs feel richer and are trading up in their dining experiences. This may be a soft spot for MCD resulting in a "stock value meal". Dividends can be the appetizer until the value is delivered upon.
I hold no direct positions in MCD and am not employed their. Moreover, it's like the tobacco stocks I own: I don't partake of the toxin they sell. I just profit off of others' poor choices.
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These companies won't soar like other plays in the sector, but they make for great income sources.
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