1. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 67
McDonald’s Corporation (NYSE:MCD) is one of the most popular fast-food chains in the world. The American multinational company operates in approximately 40,000 locations across over 100 countries. According to CNBC, around 95% of its restaurants are owned by independent local business owners.
2024 has been a tough year for the company. The brand’s boycott, sparked by the conflict in the Middle East, has affected its same-store sales and subsequently hurt its earnings. Sluggish consumer spending across the world has also not helped.
The recent E. coli outbreak linked to its Quarter Pounder hamburgers, which has already infected 75 people in the US, is a fresh setback for the company. Customer visits to McDonald’s Corporation (NYSE:MCD) have dropped by 9% nationwide, CNN reported on October 29. However, the fast-food chain is confident that its $5 value meals and chicken burgers will win back customers.
Last week, McDonald’s Corporation (NYSE:MCD) announced financial results for the fiscal third quarter of 2024. Global comparable sales dropped 1% year-over-year in Q3 – the biggest decline in four years and more than twice the magnitude projected by analysts. This was preceded by a 1% drop during the April-June quarter, marking two successive quarters of contraction. While markets in the United States returned to growth (0.3%) during the quarter, sales were down by 2.1% in international markets, led by France and the UK. Net income for the quarter was $2.26 billion, dropping 3% from last year. However, its earnings per share of $3.23 beat expectations by three cents.
Looking ahead, McDonald’s Corporation (NYSE:MCD) expects challenges to remain heading into 2025. However, the executives are confident that the E. Coli outbreak will not have any material impact on the business. They are also hopeful that their promotional value meals would lure customers back to the burger chain. Wall Street analysts also expect the stock to bounce back once the headwinds are over. They have a consensus Buy rating on MCD, with a median share price upside potential of 11%.
Despite pressures, McDonald’s is the best fast food stock to invest in right now, according to hedge fund sentiment. As of Q2 2024, 67 hedge funds, amongst those tracked by Insider Monkey, had investments in the company.
Overall, MCD ranks first among the 11 best fast food stocks to invest in right now. While we acknowledge the potential of fast food companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MCD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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