Jim Cramer’s Latest Game Plan: 20 Stocks to Watch

14. McDonald’s Corporation (NYSE:MCD)

Number of Hedge Fund Holders: 67

Cramer discussed the increasing E.Coli cases and any possible effects on McDonald’s Corporation (NYSE:MCD). Here’s what he had to say:

“Tuesday: We’re going to hear from McDonald’s. Now, listen to this, we’re probably going to get a full airing of the E. coli situation, which has taken a turn for the worse. CDC is saying the outbreak has grown, there are 26 new cases. It’s too soon to tell how much damage’s being done to the brand of McDonald’s. Now look, I think there’ll be a short-term overhang. But remember, McDonald’s has been on fire ever since they announced that $5 meal deal when a lot of customers really got more excited. Wall Street can’t stay away from the stock. We’ll know whether there’s going to be a moth to the flame situation or whether it’s just going to be solid for the rest of the year.”

McDonald’s (NYSE:MCD) is a globally recognized brand that operates and franchises restaurants, providing a wide range of food and beverages. The company employs various operational structures, including conventional franchises, developmental licenses, and affiliates, allowing it to maintain a significant presence. Recently, the company faced a challenging situation when an E. coli outbreak linked to its Quarter Pounder burgers raised concerns among investors.

Reports from the Centers for Disease Control and Prevention (CDC) indicated that at least 49 individuals fell ill across ten states, prompting a swift sell-off of its stock as anxiety over the brand’s safety grew. Fortunately, after conducting thorough testing, the company was able to confirm that its beef patties were not the source of the E. coli outbreak.

On October 22, Barclays raised the price target on McDonald’s (NYSE:MCD) to $325 from $300 and maintained an Overweight rating, as part of a Q3 earnings preview for the restaurant group. According to the firm, while comparable sales initially eased at the beginning of the third quarter, they later stabilized at lower levels.

Despite vulnerabilities posed by lower-income consumers, quick-service restaurants have effectively responded to market conditions. Furthermore, the easing of inflation and pricing pressures has contributed to a more favorable outlook for the industry.