Why You Should Invest in McDonald's Stock

Alex Hamilton  |


Investing in stock is seen as a risky business, but there are companies that have provided consistent returns to investors in the last few years. One of them is the huge fast food company McDonald's  (MCD), which is outperforming expectations for the past few years. The new CEO, Steve Easterbrook and his team of managers have been providing a consistent return for their investors. And the future looks bright for McDonald's stock.

Investments in the Future

McDonald's is known for being one of the fast food giants, covering almost the entire planet. This doesn't ensure continuous growth, so the management is always looking for new ways to get their products to their customers. The most recent one is the partnership between McDonald's and Uber Eats, which is boosting the customer satisfaction as well as the sales of the retail chain. Delivery now takes up about 10% of the total orders, being expected to rise in the next year. Being that their number one seller Big Mac is priced around $4.19, McDonald’s is sure to feel the impact of the delivery service as it increases the demand of their already-popular food items.

A New Fast Food Experience via Technology

McDonald's is also investing in technology, developing online order placement and payment. The millennials breathe technology and are glued to their smartphones, so ordering their food online and paying for it via a smart app is what they want from a fast food retailer. The new convenience level provided by this online system is expected to boost the sales.

Self-Ordering Option

McDonald's high tech investments doesn't end with online payments and order placement. The retail giant developed a new type of restaurant which goes by the name Experience of the new Future design concept or EOTF. These establishments have self-ordering kiosks and a new, better drive-thru service. A modern décor and multiple store upgrades complete the EOTF, which are expected to appeal more to the new generation of fast food eaters, regardless if they prefer to eat in the restaurant or pick up their meal on the go.

McDonald's Stock Facts

The fast food company generated $1.8 billion cash in the third quarter of the last year, which meant the investors received around $1.7 billion. The past year is the fourth year when the company is increasing its annual dividends. The future growth projects of McDonald's are expected to increase the earnings per share in the next year. Since Easterbrook took over the company, the P/E ratio increased from 21 to 26.2 and is expected to grow even more in the next two years, by 24%. But, when you compare McDonald's stock to its peers, the former has the highest price and the slowest expected growth. Wendy's has a 21.8 P/E ratio and an expected growth rate of 58%, which looks more attractive for investors.

All in one, investing in McDonald's stock can be your best bet, as the fast food giant's profits and dividends grow, reaching new heights. McDonald's is growing faster than its peers, which are an important indicator of the brand's health, providing an intriguing prospect for an investor.

DISCLOSURE: The author has no stake in the listed equities.


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
MCD McDonald's Corporation 194.91 3.30 1.72 2,918,415 Trade

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