McDonald's Corporation (NYSE: MCD) Still Has Untapped Growth Potential

McDonald's Corporation (NYSE: MCD) stock was on a tear in 2017 given that the fast food chain gained 45% last year, which was more than double the performance of the S&P 500 as tracked by the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). The restaurant chain ended the last quarter of 2017 with a 7% gain, but has been struggling to make gains in 2018 even as the S&P 500 has hit new highs.

Article Summary

McDonald’s had a stellar year in 2017 by gaining 45%.

The company’s performance is lagging behind the S&P 500 this year.

The restaurant chain has several growth opportunities this year.

Here’s the trading report on MCD.

The restaurant chain has several growth opportunities, which if monetized effectively could drive the company’s stock higher. The reintroduction of its dollar menu is a major growth opportunity as the move will allow McDonald’s to attract budget-conscious customers by offering meals priced from $1-$3.

The Taco Bell restaurant franchise owned and operated by Yum! Brands, Inc. (NYSE: YUM) is upping the competition as it recently announced the release of its Nacho Fries priced at $1 nationwide. This move is to counter McDonald’s dollar menu and is likely to be extremely popular among consumers. The move also applies pressure on other restaurant chains to follow suit.   

The company’s CEO Steve Easterbrook is transforming the company to focus on home deliveries as more consumers choose to dine at home instead of at restaurants. This trend is gaining popularity especially in regards to dinner and late night snacks. McDonald’s recently partnered with Uber Eats in order to streamline its delivery processes, and this move is likely to have a positive impact on the company’s topline.

Although McDonald’s margins have improved significantly in the past few years, the restaurant chain could further increase its margins by launching new products such as the vegan burger and its exclusive soft drink called MIX. The company could also improve the quality of its premium products by making improvements such as adding fresh quality beef to premium burgers.

The company faces stiff competition from other restaurant chain’s such as Domino's Pizza, Inc. (NYSE: DPZ), but as an established global brand the company still has numerous growth opportunities.

Finally, it is not enough to know that a stock is likely to head higher, or lower this year. As an investor or trader, it is important to time your entry and exit points accurately in order to minimize risk and maximize your profit potential.

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