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.

By MSN Money Partner Dec 24, 2012 2:47PM
In 2011, McDonald's (MCD) was one of Wall Street's darlings, with the stock gaining some 30% -- well outperforming the Dow's ($INDU) 5.5% advance. So far in 2012, it's been one of the Dow's dogs, plunging year-to-date about 11% as the Dow has risen nearly 8%.

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.

A sign outside the fast-food chain McDonaldBlaine 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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Tags: MCDYUM
133Comments
Dec 25, 2012 10:24PM
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Um, wasn't Mcdonalds using  'PINK SLIME"? ............they stopped when it was brought to the publics attention, but they'll try to slip it back in when the coast is clear or they change the name of it...........buy a cheap steak, go home and grind it up or go to a deli in a supermarket

Dec 25, 2012 10:19PM
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Bad customer experiences will eventually catch up with all stores as I too avoid Mickey D'd like the plague after getting shorted, wrong orders and counter people that wait on you with a dumbfounded look. I swear Bevis and Butthead must be training their order takers.
Dec 25, 2012 10:15PM
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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

Dec 25, 2012 10:08PM
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it is the bad kangaroo meat they use.
Dec 25, 2012 9:00PM
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The food ? The food tastes like ****
Dec 25, 2012 1:36PM
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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.

Dec 25, 2012 1:12PM
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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.

Dec 25, 2012 9:06AM
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MCD is a great value stock today.. the only reason the stock has taken a hit this year is due to the CEO stepping down.. otherwise its a great company which is recession resistant.
Dec 24, 2012 8:41PM
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its cheaper to eat real food look at the price 6 dollars or more for a value meal
Dec 24, 2012 4:53PM
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Why did I stop going to McDonald's? (was a patron at least once a week for several years)...I quit going because I got sick and tired of coming home to find my order was NOT what I PAID for! Either food would be missing from the bag or it would not be prepared as requested. I don't understand how it can be so difficult to understand when someone says NO pickles..and I get home to find the item OVERLOADED with them..yet the receipt CLEARLY states NO pickles. This happened at least 2 out of 2 times. It was not cost effective for me to go back (15 mile round trip), and I got NOWHERE when calling to speak to a manager about the situation. If they want to keep customers satisfied and coming back, then they ought to at least hire employees who know how to read an order ticket! I even tried staying away for over a year and then tried again...and would you believe, NOTHING changed! So needless to say, I am DONE with them...FOR GOOD!
Dec 24, 2012 4:48PM
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whats wrong with mcdonalds... to start with.. they use to have the best fries in the world but think they changed the oil they cook them in and now they taste like crap....i myself stopped going there to eat because of this
Dec 24, 2012 4:45PM
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whats wrong at McDonalds...Well to start with..they used to have the best fries in the world but i think they changed the oil used to fry them in and now they taste like crap... i myself stopped going to McDonalds because of this...
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