Stock Idea: McDonald’s Corporation (MCD, $75.98)

(Originally published on February 18, 2011 at

McDonald’s Corporation’s restaurants can be found in 100 countries worldwide.

Despite the company’s size, McDonald’s experiences annual earnings per share (eps) growth. For fiscal years 2011 through 2013, eps are expected to grow 8.9%, 9.7% and 9.3%. The price earnings ratio, based on 2011 projected earnings of $5.02 per share, is 15.1.

The dividend of $2.44 per share yields 3.21%. The ex-dividend date is February 25th. Owners of the stock PRIOR to the ex-dividend date will receive the upcoming dividend payment. Owners of the stock ON or AFTER the ex-dividend date will receive the subsequent quarterly dividend, but not the current quarterly dividend.

McDonald’s stock went down, like most stocks did, prior to the Gulf War in 2003; but curiously, it did not fall precipitously, nor even break below its trading range, during the financial meltdown of 2008. This shows a stock which investors are loyal to; which they do not panic and sell. For people who want to own a lower-risk stock, McDonalds is a wonderful choice. The beta is 0.40. Beta is a risk measurement, and numbers below 1.0 are generally considered “lower risk stocks”.

“The beta is a measure of a stock’s price volatility in relation to the rest of the market.” — (learn more here)

McDonald’s stock has recently been on an uptrend, trading between $73 and $80. I would be very comfortable buying at the current price, receiving the quarterly dividends, and watching the stock reach new highs later this year. It may not do so, but for traders and investors who would be happy to earn 10-25% total return this year, there is a good opportunity to earn money this year with McDonald’s stock.

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