McDonald's too expensive?

[Kerim]

So MCD has been getting some rough press lately, such as slow sales growth, wage pressure from employees, and just today I saw this article about discontent franchisees: http://www.huffingtonpost.com/2013/08/06...lp00000003.

I'm hoping that this all adds up to downward pressure on the share price. I'd like to pick up a few shares soon, and I'd just as soon they be on sale when I do! Any thoughts?

[Dan Mac @DGSInvesting]

I agree with you Kerim. MCD's was one of my first dividend growth stocks I purchased and I'd love an opportunity to pick up some more lower priced shares for my portfolio.

I think the important thing to remember is that bad news can have a lowering effect on the stock price which is a good buying opportunity. As long as the financials (income statements, balance sheets, cash flow statements) remain strong then investors have nothing to fear with negative news and can use it as a great buying opportunity!

[scott]

I too bought MCD recently at approx $101/share. While retrospectively I would have preferred to buy it now (at 95.03), over the long run this little dip is fine, especially considering my small amount of dividend reinvestment will be able to buy more shares. It is not like MCD is going anywhere.

I can't remember where I read or heard this, but if you think of it this way it makes sense: When we go to the grocery store do we want to see the prices of all the products go up in price? No, we would prefer to buy things at discounts. The same should be true for stocks. "Be greedy when others are fearful," as Warren Buffett has said. If you watch the business news channels and talking heads then you might think it is the opposite. To continue the analogy, everyone there is happy to see grocery store prices rise when you want to buy. Buy recommendations increase substantially as the stock price rises since everyone wants the positive reinforcement of going with the crowd and being "right."

I'm long MCD and might add to my position (after purchasing some KO first, that is).

[Ok Red]

"Think about that carefully. What that means is that -- relative to the income stream from dividends -- MCD is cheaper today at $98.53 than it was in August 2011 at $82.71. If you focus on the income stream that you are purchasing with your newly invested capital, rather than just on the share price, it can be clear that new highs don't matter so much."

This was hugely illuminating! I feel better!

[Kerim]

(08-21-2013, 09:08 PM)Ok Red Wrote: This was hugely illuminating! I feel better!

Thanks for that post, Ok Red -- that made my day.

Kerim

[ronn38]

I picked up MCD when it dipped to $95 recrntly- feel great both about the stock and the price!

Ronn

[Kerim]

(08-31-2013, 05:13 PM)ronn38 Wrote: I picked up MCD when it dipped to $95 recrntly- feel great both about the stock and the price!

Ronn

That's great Ronn, nice buy. I'm keen to pick up a few more shares as well, but with prices on many stocks dipping, I'm not sure which to grab first. MCD is definitely in the top 5 for me, though!

[Shawnjeffrey]

They raised the dividend to .81 cents today, a raise of 5%.