3 reasons to buy McDonald’s

3 reasons to buy McDonald’s

2020-04-29 • Dikemaskini

The hamburger giant has outperformed its peers. Let’s see how the company is adapting to the new environment.

McDonald’s will release its first-quarter earnings on April 30 at 15:30 MT time. Obviously, most analysts foresee that McDonald’s earnings will fall, but not as deep as other companies of the same industry. For comparison, let’s look at how much their stock values have decreased this year.

McDonald’s - 6.9%

Starbucks - 14.0%

Jack in the Box - 28.4%

Wendy’s - 14.9%

That is the first reason that the McDonald’s stock price is worth buying. The second one is that the company has been still operating its drive-thru, delivery, and takeout services.

Of course, there is a 3.4% decline in its overall SSSG(same-store sales growth) during the quarter due to COVID-19, but the surge in the amount of franchised restaurants can offset a part of it. As 93% of restaurants are franchise, reduced sales won’t have a huge impact on the company’s margins.

Finally, let’s turn to analysts’ forecasts. Most of them put their price targets lower, but their expectations are still bearish. Among 35 Wall Street’s analysts, 71.4% of them recommended to buy McDonald’s.

On the chart below we see that the stock price had declined hugely because of the COVID-19, but then it almost rebounded its previous position. It broke through 61.8% Fibonacci retracement level and the 50-day moving average at the 182.45 mark. The next resistant level is 193.15.

MCDONALDSDaily.png

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