“DO YOU HAVE ANY THOUGHTS ON MCDONALD’S AND WHEN YOU WOULD LIKE TO REVISIT THIS ONE?”
That’s the question a subscriber recently asked Hedgeye Restaurants analyst (and original McDonald’s bull) Howard Penney on The Macro Show.
Here’s Howard’s response:
“I’m waiting for the fourth quarter to come and go. They’re climbing a wall of worry into the fourth quarter into the first quarter, so I would rather get past that. I guess a simpler way to say it is I’m hoping McDonald’s isn’t a one trick pony. With the introduction of all-day breakfast in the fourth quarter [of 2015], I’m waiting to see if they can actually comp the comps and do better.”
Having authored the non-consensus bull case on McDonald’s back in 2015, Penney’s opinion on the $100 billion hamburger chain is worth paying attention to.
Last year, when shares of McDonald’s were trading in the mid-90s, he argued that “2015 will be the last time this stock is below $100.” His call was spot on. Today, McDonald’s shares are trading over $120.
Three months ago, however, Penney grew increasingly concerned about a slowdown at the company, and the restaurant industry more broadly. “I’d rather wait for that than try to chase it here,” Penney says. MCD is no longer on his Best Ideas list.
His advice? Wait for confirmation that the top-line recovery story at McDonald’s is more broad-based than just all-day breakfast (sometime after the fourth quarter).
