In January, McDonald's
The fast-food giant's shares have cooled considerably; in May, waiting for a better price on Mickey D's stock seemed like the smartest idea, given some uncertainties. First and foremost, CEO Jim Skinner will retire this summer, leaving his successor Don Thompson with an extremely tough act to follow.
Furthermore, McDonald's same-store sales growth in May left a lot to be desired. Worldwide comps growth rose 3.3%, disappointing analysts' expectations. Worse, growth in McDonald's Asia, Middle East, and Africa segment decreased 1.7%. Such a disappointment is significant, because Asian market sales potential is highly coveted by investors. The current situation in Europe is a worrisome component for many companies as well, including McDonald's.
The specter of slower growth in Asian markets, particularly China, has also had a negative impact on shares of fast-food rival Yum! Brands
Of the basket of restaurant stocks to choose from, there are far less appetizing options than McDonald's. Take Ruby Tuesday, which is duking it out in the difficult mid-market casual restaurant segment; its latest annual results showed weak sales and a lackluster outlook. Ruby Tuesday's founder and CEO plans to resign, too.
Hardcore bargain-hunters would probably also consider McDonald's a shares far more reasonably priced than, say, Chipotle
McDonald's has been a stellar stock to own. It's a solid company for the long term, and its price today is certainly a much better bargain than it was in January. Then again, McDonald's tough operational comparisons with past stellar years, the macroeconomic uncertainty, and Skinner's approaching retirement all add a little extra risk right now. Potential Mickey D's investors may still get a better deal on the shares if they wait patiently through the coming months.
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Alyce Lomax owns no shares of any of the companies mentioned. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread. Motley Fool newsletter services have recommended buying shares of McDonald's, Chipotle Mexican Grill, and Panera Bread and creating a bear put spread position in Chipotle Mexican Grill. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.