The stock market took quite the tumble the past few days. On top of the carnage, McDonald's reported horrible October numbers. According to the report I read, sales were down 1.8% this October compared to last year. US was down 2.2%, Europe down 2.2% and Asia/Africa down 2.4%. Yikes! Exchange rates made matters worse meaning it wasn't as bad in constant currencies. Unfortunately currencies don't stay constant in the real world. The numbers are what they are and is a negative aspect of having global operations.
It's no wonder MCD stock set new 52 week lows. MCD is now trading at a 16.0 p/e which is lowest I've seen in quite a while. I'm a long term investor buying shares of companies I plan to hold for many years. I fully expect negative news and a bumpy ride along the way. Even with short term struggles I think McDonald's will continue expanding operations and profits over time. When I was a kid they used to report how many hamburgers they served on their signs. It used to be "X billion served". Then it was "billions and billions served" starting in 1994 because the number simply became too big. Executives must have figured counting hamburgers past 100 billion was pointless. McDonald's plan to take over the world is working nicely!
I added 15 shares to my portfolio at a 3.57% yield including commissions. This is my fourth MCD purchase in 2012 and the best price to date. I don't know if the price will go down from here, but I do know I picked up the shares in time to collect the dividend next month.
The way this market is headed I'll probably make one more purchase in November.
Nice buy. MCD is definitely high on my watch list to add to. It's always nice to lower your cost basis on core DG stocks that you plan to hold long-term.
ReplyDeleteOther than 100 shares of INTC probably getting put to me, I won't be doing any other purchases this month. I do hope the market decline continues into December so I can hopefully pick up a couple of stocks at good values.
Take care!
Thanks man. I might even make another round of MCD purchases on further weakness. We'll see.
DeleteNice purchase. If I had more cash, then I would be buying MCD, too.
ReplyDeleteThanks for the support.
DeleteGreat buy here my friend. I'm with you on buying MCD at current levels. I'm lovin' it!
ReplyDeleteMCD is an absolute empire of a business. The brand name is right up there with Coca-Cola, Apple, IBM and the like. An absolute juggernaut that will only continue to grow over time. That middle class in China is just STARTING to get a taste of McDonald's!
Best wishes.
I agree. This company is growing and is already an international powerhouse.
DeleteI have had opportunities to drive all over S. Korea and have noticed quite a few more McDonald's since my last report. Just yesterday I saw a drive in McDonald's, which is rare here. I remember this because the store only had 1 golden arch, not 2, and I thought it was odd! Most McDonald's in Korea are walk in only and some are on the second story of a building. It's weird for sure! I have yet to eat at McDonald's since in my 5 months here. I will be rectifying that situation soon!
Great buy at a nice price! Here in Yokohama the MCD is always packed! And I pass by six or seven locations on my 12km bike ride to work. I'm pretty sure they will work through this little slump. In the mean time we'll pick up stock at rock bottom prices!
ReplyDeleteThanks Kechi! I've seen quite a few McDonald's restaurants in Korea, but nowhere near the same saturation as in the US. I'd really like to visit Japan while I'm in this part of the world. Unfortunately I don't think it will be in the cards this time around. Perhaps one day I will be stationed in Japan.
DeleteThe only problem that I have with a stock like MCdonald's. Its a very good company alright Its the high degree of popularity of the company. Companies like MCdonald's are very well covered so theirs not much chance for the stock to be picked up when its a really great value unlike some lesser know names. To many investors confuse quality with value. Generally speaking a good value stock is performing at a subpare level so it generally trades at a significant discount to its actual value. Value investors are looking to buy a company for 10 dollars a share when the companies really worth 20. Another big mistake many investors make and wrongly so is the notion that size equals value or a household name equates to value. Just because a stock is not a household name does not mean that the company cannot be of superior quality. A very good example of a really overvalued stock is whole food market. The stock trades at a PE of close to forty times earnings. Companies in a simlar line of business trade at only maybe 15 times earnings.
ReplyDelete