It is no secret now that while most of the market is focused on the developments inside the technology sector, particularly around stocks exposed to the wave in artificial intelligence, other extremes in the market are feeling a bit of pain. Some of these forgotten and beaten down sectors include the consumer discretionary names, as judged by the 14% underperformance from the Consumer Discretionary Select Sector SPDR Fund NYSEARCA: XLY against the broader S&P 500 in the past year.
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The recent decline in McDonald's stock presents a buying opportunity for longer-term and shorter-term investors. Reasons for the recent pullback include profit-taking, earnings miss, and concerns about consumer spending. McDonald's could become a "Dividend King" and has growth drivers like menu innovation, decline in U.S. Dollar, and AI benefits.
McDonald's (MCD) concluded the recent trading session at $247.85, signifying a -1.29% move from its prior day's close.
Life and the market are about compromise. Generally speaking, if you're looking for high growth, you typically aren't getting much in the way of dividends, if anything.
Australia is facing an egg supply crunch thanks to bird flu outbreaks — and it's led McDonald's to trim breakfast hours by 90 minutes. Australia has been battling outbreaks of the Avian influenza virus in the past few months, which has resulted in about one million egg-laying hens being euthanized and affected to limit the spread of the disease, according to Murray Watt, the country's minister for agriculture, fisheries and forestry.
Restaurant operators are investing in voice-ordering technology to take down drive-thru orders and lower their labor costs. But the technology is still years away from hitting most drive-thru lanes, as companies like McDonald's figure out the best approach.
McDonald's had a solid Q1 earnings report with high single-digit YoY operating income growth and 5% YoY revenue growth. A resurgence in popularity among Gen-Z consumers along with real operational efficiency improvements have allowed McDonald's to expand margins even amidst a tough macro environment. The recent selloff in reaction to slowing comparable sales growth has left shares trading around $250 suggesting a 24% undervaluation in my base-case scenario.
Good luck getting a late-morning McMuffin in Australia.
24/7 Insights The McDonald's Corp. (NYSE: MCD) $5 menu has not impressed investors, perhaps because they think consumers won't be either.
McDonald's pays investors an above-average dividend. The company has an impressive dividend growth streak going.
When McDonald's Corp. announced its mixed first-quarter results on April 30, CEO Chris Kempczinski said customers were being “more discriminating with every dollar” they spent and that the company would “continue to earn their visits by delivering leading, reliable, everyday value and outstanding execution” in its restaurants.