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Stock Strategist

Why We're Lovin' McDonald's

10 reasons it's our top restaurant pick.


McDonald’s (MCD) may seem like an unconventional choice for our top restaurant pick. Stagnant traffic trends in 2019 have called into question the lasting efficacy of the company’s various “velocity drivers,” including Experience of the Future store formats, digital ordering, and delivery. Competition remains fierce, with several rivals seeing strong comparable sales results from plant-based burgers and premium chicken sandwiches, and promotional activity is likely to escalate in 2020. On top of this, the company recently had a high-profile management change, with McDonald’s U.S. head Chris Kempczinski assuming the CEO reins from Steve Easterbrook in November 2019.

While these factors are investment considerations, we still see several reasons McDonald’s should be on investors’ radar screen. Our confidence stems from new technology investments (particularly at the drive-thru), menu innovation plans, a recession-resilient brand, strong cash return qualities, and an underrated management team. Results could be choppy through the management transition in the first half of the year, but ultimately, we believe there are several positive catalysts at the forefront.

R.J. Hottovy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.