McDonalds (MCD)

Very intriguing about 1.5 years ago when the stock was $90 a share. It has had a great rally. Have done a lot of cost cutting, brought in a healthier product line, and brought in the All-Day breakfast. That is now priced into the stock, and now we are back into just same-store sales. The stock is fairly valued right now. It is a dividend grower which he likes. He would like to see a little more visibility on what is ahead on new menu options, etc. He owns a small amount.

(A Top Pick Sept 17/15. Up 22.92%.) Sold his holdings. Still likes the name, but when you make that kind of money in a year, you take a hard look to see if the growth or the future upside is nearly as compelling. He went into another food retailer. Still a safe name to hold, but not a lot of upside in the near term.

The underlying stock has a pretty good earnings growth profile and it gives you a reasonable dividend. It is certainly positioned internationally.

Everyone can own it. It is a great company. It has always produced consistent return on invested capital. It is very good and very sustainable. When the return on capital is rising you want to be in it and when it is dropping you want to get out. It is just starting to turn over, so wait for a better time to buy it.

Largest restaurant chain in the world by sales. It has repositioned itself in the last year or so, so the stock has done well. You get a nice dividend and PE of 20 times earnings. They offer all day breakfast which is a home run for the stock. He likes it.

Had a great run for the last year or so when the new CEO came in and turned things around. The all-day breakfast has been a phenomenal hit for them. Now that it is trading in the low 20s multiple, the question is how much can it really keep growing and how much of margin expansion opportunities are there for them in their core market of the US. The question is, what is their next trick?

For the defensive investor. You get 2 themes here, the consumer and real estate. 1.) At the consumer level you have 20 states that have raised the minimum wage. 2.) This really is the biggest REIT globally. The franchisees pay rent on their properties. Dividend yield of 2.83%, and have grown it at about 8% over the last 5 years.

They have a new CEO and are doing great things. Changing menu items, value items, all Day breakfast, revamping stores, etc. A little rich on the earnings valuation at 22X. Same-store sales are close to 6%. Dividend yield of 2.91%.

A great company and a leading innovator. As a company, he really likes it, however it is just way too expensive. Trading at about 22X. 2.9% dividend yield. You aren’t going to get hurt holding this.

He likes that they have taken the bull by the horns and understood that they have been an underperforming asset. In the short term, that has had some benefits. The All Day breakfast has been a huge hit, but deep down he has his doubts if this is going to carry the company to a new and exciting future. Also, the valuation is not cheap.

This went through a few difficult years. A great company and you get 5%-10% dividend growth going forward. They have repositioned the business since the beginning of 2015. Streamlined the menu and introduced all day breakfast. You will probably see low single digit revenue growth and close to double digit dividend growth. Dividend yield of 2.9%.

Have had a miraculous recovery and the stock price is up 20%. At this stage, the problem of low growth and cost control really hasn’t been solved. Longer-term they still have to deal with eating habits, and at this stage he doesn’t think they really know what to do.

Restaurant stocks in the US have been struggling for the last year. This one is positioned very well. They are innovative and have been moving to a healthier menu over the past couple of years. Very well liked internationally. He would buy this on any pullback.

(Market Call Minute.) Still posting negative comps, and yet because they are getting better it is being priced in the market.

(A Top Pick June 5/15. Up 37.16%.) There was a lot of pessimism priced into this company, and they have had a few things go their way. The main one is Steve Eastbrook who took over the business, and understands that the company needs to have a clear identity, as opposed to just being a generalist. Don’t expect the same upside. Pays a great dividend. Has a low beta.