The investment potential of McDonald’s stock continues to appeal to me. I think that under its current CEO it is delivering on its potential, with its strategy seeming to be sound.
One area where I think the company has moved in the right direction is the adoption of new technology. The self-service kiosks in its restaurants have generally been a success. Sure, there is an upfront capital cost, but with there being the potential for reduced labor costs, this could have a positive impact on profitability over the medium term.
Further, McDonald’s has found that when people dwell, they order more. In other words, ordering at a self-service kiosk has led to bigger orders per customer for the company, and this could have a positive impact on comparable-store sales as the kiosks are rolled-out across the US following success elsewhere in the world.
Additionally, the company is seeking to capitalize on the growing trend for online ordering of takeouts. The partnership with UberEats provides the company with the opportunity to tap into what is a growing market. And with the trend towards online ordering seemingly strong, the company could enjoy a tailwind in this area.
Of course, the decision to refranchise McDonald’s restaurants was also a shrewd move in my view. It means reduced costs for the company, and has helped to boost its margins. There is still a little way to go in its refranchising efforts, so there could be a further catalyst on its stock price over the medium term.
Sure, the performance of the stock has been positive in recent years. But with what I consider to be a sound strategy, there could be further price appreciation ahead. As a result, I remain optimistic about the prospects for the McDonald’s stock price over the next few years.