Dow Snaps Win Streak; $18 Billion Can't Satisfy McDonald's Shareholders

United Continental Holdings, Inc. rallies on the FAA's Boeing 787 ruling; Shutterfly stock may be overpriced

May 28, 2014 at 6:28PM

The Dow Jones Industrial Average (DJINDICES:^DJI) broke a four-day winning streak Wednesday, as 19 of its 30 components lost ground. Leading the blue chips lower was McDonald's (NYSE:MCD), which finished as a standout underperformer as investors lamented the company's plans to return capital to shareholders. At the ring of the closing bell, the Dow was off 42 points, or 0.3%, ending at 16,633.

You'd think that any time a company unveils a plan to return between $18 billion and $20 billion to the pockets of its investors, the underlying stock would skyrocket. Today would have proven you wrong: McDonald's announced just such a plan at an investor conference on Wednesday, and shares promptly lost 1% in response. CEO Don Thompson said the capital would be returned in the form of dividends and stock buybacks through 2016, as McDonald's raises quick cash by converting company-owned restaurants to franchised locations. The company, worth $100 billion by Wall Street's best guess, already pays shareholders a 3.2% annual dividend, so increasing it further implies the company has run out of ideas to maximize shareholder value.

Another mammoth in its respective industry, United Continental (NYSE:UAL), soared 3.2% on Wednesday, bucking the markets' broader negative trends. United Continental's peers also ignored the selling in the stock market today, as airline stocks tacked on 1.5% as a group. United Continental stock, however, managed to outperform its peers due to a little help from regulators. (You read that right... I said help from its regulators.) The U.S. Federal Aviation Administration gave American carriers a thumbs-up to fly the newer Boeing 787 model with fewer restrictions, allowing airlines to use the planes for a much wider range of routes and international destinations. United Airlines is the only U.S. airline currently flying the 787, so it will reap the rewards sooner.


Shutterfly: Phenomenal business. Risky stock. Image source: Company website

Elsewhere in the consumer-services sector, you won't find Shutterfly (NASDAQ:SFLY) hawking burgers or flying people through the air. Instead, the company specializes in the relatively new business of printing your digital photos in a variety of custom fashions. An innovator in its field, annual sales more than tripled from 2009 to 2013, as demand for personalized calendars, greeting cards, and photo books took off. Shutterfly's stock price has responded in kind, nearly tripling in the last five years, as well. I must echo my colleague Sean O'Reilly's sentiments, however, warning that the stock's current valuation isn't overly compelling. Shares shed 0.5% in trading today.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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