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  1. #1
    Veteran Member hchandra's Avatar

    McDonald Is it chance or is it a risk !!!

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    Looking at McDonald Charts several think jump out of my head,
    year to date shares already increase 8.14% underperforming compared to services sector that increase 13.77%
    from fundamental side we have strong company and I try to break down the positive odds vs negative odds
    Positive:
    - The stock still in uptrend with growing revenue from $6.546M to $6.605M while 2013 first quarter EPS increase by 2% compared to last year same quarter.
    - positive Free cash flow, ensuring company have fresh cash for investment or operational activity
    - average dividend growth rate of 15.2% each year
    - adding of breakfast menu for more variety to the night owler, now the menu offered too from midnight to 4 AM, this might boost income in the future

    Negative
    - Minimum wage increase – Obama would like to introduce minimum wage increase from $7.5 / hour to $9 / hour, there will be adjustment if the minimum wage increase happen, McDonald is labour dependent company small increase will make large difference.
    - End of 2012 earnings has been lower compared to year 2011, this is the reason why McD stock underperforming S&P by 25% last year.

    I personally think long term call from level of $92.5 (Near moving average 200) or current level around $96 - $97 after McD closing gap created last March 2013 would be interesting.

  2. #2
    Specialist Member marvel's Avatar
    The market capitalization of McDonald is too large – close to 97 billion $ and P/E is close to 18. That is not for a company with small profit margins and potential rise in the labor cost in the coming months. I won’t buy Calls here, no way. Also the consumers trend is going away from fast food and now the new positive trend is on healthy food sellers. Look at the charts of Whole oods and you will see what I mean!

  3. #3
    Veteran Member hchandra's Avatar
    Quote Originally Posted by marvel View Post
    The market capitalization of McDonald is too large – close to 97 billion $ and P/E is close to 18. That is not for a company with small profit margins and potential rise in the labor cost in the coming months. I won’t buy Calls here, no way. Also the consumers trend is going away from fast food and now the new positive trend is on healthy food sellers. Look at the charts of Whole oods and you will see what I mean!
    Hi Marvel, yes I think that is the risk in the whole foods company,
    There are more and more healthy food sellers, and future labors pay increase.
    I think they are currently anticipating by spreading the menu into breakfast menu at midnight, this might help but still in experiment stage
    Last week increase in sales news for May is encouraging for short term,

    I personally think we will need to wait for chance to buy call when it reach the stronger support.

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