I like McDonald’s and not just for their chicken nuggets and skinny fries. I like them because they are a good potential stock to buy as well.
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They are growing with a strong balance sheet. Someone once said that they are really a real estate company. In other words, all they have to do is find land and set up shop and they will make money.
In addition to the market growth potential, this company has great management. They always have. This is one of the main reasons I think this is one of the best stocks to buy right now.
The growth in world population and the rise of the middle class in the emerging markets are creating brand new opportunities for substantial growth for McDonald’s. There is a fast growing middle class in places like China, India and Brazil with increasing disposable income. This is a brand new generation of McDonald’s customers that are on the rise.
Their financials reflect this growth and the opportunities that exist for this company. Sales grew by 12% last year. Net profit before taxes grew by 14.46%. Their 5 year revenue growth rate is 5.26% and their 5 year EPS growth rate is a stunning 18%. Those are really good growth rates for a Dow Jones stock. You also get a nice dividend yield of 2.8% with this stock.
Their P/E ratio is slightly higher than average at 18.95. The average for the Dow is 13 and S&P 500 is 16. Still, I think projections of their future cash flows warrant a higher stock valuation. I think McDonald’s is a good value buy. If they miss estimates and the stock price dips, I would buy this stock while it was cheap.
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Disclaimer
Remember that investing is a very risky activity. You can lose all or most of your initial investments. Consult a licensed financial advisor before implementing any investment strategy. Historical performance is no guarantee of future performance. No one can accurately predict the future, at least not consistently over time. The writer of this article and owner of this website do not own any of the stocks mentioned in this post.
