We recently published a list of 10 High Growth Food Stocks to Buy. In this article, we are going to take a look at where McDonald’s Corporation (NYSE:MCD) stands against other high growth food stocks to buy.
The global food industry has always stimulated economic growth, innovation, and a shift in consumer trends. It is projected to reach $2.2 trillion by 2032 from its market size of $1.64 trillion in 2022, at a compound annual growth rate (CAGR) of 2.99%, according to Market Research Future. Despite food being a necessity, the business dynamics within the food industry are very complex and companies must be adaptable as they navigate the complexities of rising production costs, changing consumer preferences, and global supply chain disruptions.
Within the industry, inflation remains a key topic. While it was soaring in 2022, food prices have since declined. However, they are on the rise again, causing financial strain on both consumers and businesses. As reported by the U.S. Department of Agriculture (USDA) in December 2024, grocery prices went up by 1.8% compared to the previous year, and food-away-from-home costs increased to 3.6%. Especially staple food items, including eggs and beef, had a sharp rise due to the avian flu wave and the supply limitations. These price fluctuations create a challenge for food companies, which must adjust their pricing strategies without sacrificing demand or alienating customers.
On the other hand, consumer behavior is also changing, putting forth factors like health, sustainability, and convenience. Thus, specialty stores have seen an increase in the demand for fresh and raw food. At the same time, budget-conscious shoppers are gravitating toward discount retailers, highlighting the growing importance of affordability. Thus, food companies must meet diverse consumer needs driven by the dual trend of seeking premium and value-oriented products.
Furthermore, technological breakthroughs are also contributing to the industry’s transformation. Supply chain optimization, waste reduction, and increased production efficiency are being greatly aided by automation and artificial intelligence (AI). Moreover, robotics is deployed in food processing to increase production and efficiency, while AI-driven demand forecasting helps avoid inventory problems. Consumers’ growing need for convenience is being met by the usage of digital ordering and delivery platforms, which opens new avenues for revenue growth. By adopting these technologies, companies are keen to improve operations and take advantage of growth opportunities in a market that is constantly evolving.
Even with economic instability, the future of the food industry is promising, driven by global population growth, urbanization, and the expanding middle class in emerging markets. In addition, new investment opportunities are being created by the popularity of plant-based meals and alternative proteins. Thus, big industry players are prioritizing the integration of technology, sustainability, and innovation in their business model to capitalize on future growth potential.
Many stocks stand out for their capacity to capitalize on this growth potential.
Methodology
To curate our list of the 10 High Growth Food Stocks to Buy, we used Finviz stock screener to gather stocks within the food sector with a strong market capitalization. We then narrowed the list based on each company’s five-year compound annual growth rate (CAGR) to identify those demonstrating consistent revenue expansion.
Furthermore, we also considered the number of hedge funds holding stakes in each stock, using data from Insider Monkey’s hedge fund database, which tracks the activity of 1,009 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A cook in a busy kitchen assembling cheeseburgers for orders.
McDonald’s Corporation (NYSE:MCD)
Number of Hedge Funds Holders: 67
5-year Revenue CAGR: 7.78%
McDonald’s Corporation (NYSE:MCD) remains an influential force in the global fast-food industry, with over 40,000 restaurants spread across the globe. To drive long-term growth, the company continues to leverage its brand strength, extensive operational scale, and technological innovations.
However, McDonald’s Corporation (NYSE:MCD) faced a downfall in 2024, with full-year comparable sales declining by 0.1%. Despite this, Q4 ended December 31, 2024, showed signs of recovery with a 0.4% increase in sales. However, the U.S. segment faced an issue related to food safety, causing a YoY decline of 1.4%. Regardless of these challenges, the company’s management is optimistic that the business will fully recover by Q2 2025, as consumer trust and foot traffic gradually return.
Globally, the company showed varying trends. Spain and Germany exceeded performance through value-driven promotions and creative menu innovations, such as the Friends-themed Happy Meal and Hot Ones collaboration. Meanwhile, the U.K. and France faced a decline due to unstable economies. Considering these challenges, McDonald’s experienced rebounds in the Middle East and saw early signs of stability in China, boosting future growth prospects. Furthermore, McDonald’s Corporation (NYSE:MCD)’s focus on affordability and digital engagement has helped it thrive, with 175 million active loyalty users contributing $30 billion in system-wide sales over the 90-day period.
In line with its growth strategy, McDonald’s Corporation (NYSE:MCD) continues to prioritize expansion with plans to reach 50,000 locations globally by 2027. In 2024 alone, the company added 2,200 new units, including significant growth in China, a key market for its future. For 2025, McDonald’s has projected capital expenditures of between $3 billion and $3.2 billion, primarily dedicated to new restaurant openings. At the same time, the company remains committed to innovation, with the reintroduction of snack wraps and expanded chicken options expected to drive future expansion.
Therefore, McDonald’s Corporation (NYSE:MCD)’s ability to overcome current challenges and continue to grow allowed it to stand among the 10 High Growth Food Stocks to Buy.
Overall, MCD ranks 10th on our list of high growth food stocks to buy. While we acknowledge the potential of MCD as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.
