McDonald's Lovin' Its Turnaround

McDonald's (NYSE: MCD  ) is definitely doing something right. The fast-food burger joint has undertaken a whole host of iniatives in the last several months to turn its business around and get same-store sales headed in the right direction.

The magic is working. Late yesterday, McDonald's announced that U.S. same-store sales for the flagship brand jumped 10% in the month of September and 9.5% for the third quarter. That's impressive, and better than the strong 4.9% hike in the second quarter.

McDonald's is keeping both investors and customers happy. It recently raised its dividend 70%, bringing its yield up to 1.7%. And who can argue with a stock that's gone from $12 to $24 since March?

For diners, the scrumptious new salads are making fans of folks who, until recently, would rather have eaten nearly anywhere than a MickeyDs. And the bizarre new McGriddles are still tastily trendy. On deck next: revamped, all white meat Chicken McNuggets and healthy adult "Go Active Meals."

McDonald's snappy advertising campaign -- "I'm Lovin' It" -- is also gaining legs. The endorsement from hunky boy-band heartthrob Justin Timberlake was a shrewd move. Couple that with the new Neptunes-produced music to support the spots, and McDonald's looks more and more like a hip destination.

In fact, on MTV's hit show "Total Request Live" (known for launching the vanilla Carson Daley into our lives and for screaming teenage girls more than anything else), Justin Timberlake's new video for "I'm Lovin' It" has been topping the charts. The video isn't a marketing spot, but parts of the song will be used in McDonald's advertising. Smart. It's marketing that doesn't even look like marketing.

McDonald's is turning out to be a study in how to quickly fix what's wrong inside a huge organization. There's still some work to do, no doubt, but the company is much further along than many anticipated it would be. Bravo to patient shareholders and to the company's management.

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10/21/2016 4:01 PM
MCD $113.93 Up +3.36 +3.04%
McDonald's CAPS Rating: ***