McDonald’s Corporation (MCD): Five Reasons I Continue To Own This Stock

Using this metric, McDonald’s 3.01% yield, 8.69% growth rate, and forward P/E of 17.89, gives the company a PEG+Y of 0.65. The only company with a better combination of traits is Starbucks Corporation (NASDAQ:SBUX) with a PEG+Y of 0.72. Starbucks’ higher growth rate more than offsets the company’s relatively lower yield and higher P/E ratio. By comparison, Yum! Brands, Inc. (NYSE:YUM) is expected to grow faster than McDonald’s, but pays a lower yield, and has a higher P/E, thus the company’s PEG+Y comes in at 0.62. Chipotle Mexican Grill, Inc. (NYSE:CMG) may be expected to grow the fastest of the group, but the stock is priced accordingly, and carries a PEG+Y of 0.56.

Last but not least, investors shouldn’t overlook the value of the company’s re-imaging program. When a McDonald’s is re-imaged, the store is updated to better match the casual dining segment, rather than a traditional fast food place. Higher end furniture, free Wifi, and LCD televisions, should help customers relax and stick around to buy more. McDonald’s is going after the crowd that would visit a Starbucks or a Panera Bread Co (NASDAQ:PNRA). Given Starbucks Corporation (NASDAQ:SBUX) and Panera Bread Co (NASDAQ:PNRA)’s growth rates, there is no question this is a smart move.

The bottom line is, McDonald’s looks like a solid value, even after the run the stock has been on. The company is constantly reinventing itself and new menu items help to expand their customer base. The company is challenged right now because over 39% of their revenue comes from Europe, but as those economies heal, McDonald’s will be there to benefit from the upturn. Investors get paid a competitive yield, the company keeps buying back shares, and opening new locations. This seemingly boring business has given me plenty of reasons to stick with the stock.

The article 5 Reasons I Continue To Own This Stock originally appeared on Fool.com and is written by Chad Henage.

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