Consumer Sector Ideas

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McDonald’s - >>> Fast-food giant McDonald’s was as prepared as any restaurant chain could be for a global pandemic. About 65% of McDonald’s restaurants worldwide, and 95% of restaurants in the U.S., are equipped with a drive-thru. When dining rooms were shuttered in 2020, the drive-thru played a critical role for the company.


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McDonald’s has also been investing in digital sales and delivery. The company launched a revamped mobile app in 2017 that allowed customers to order and pay from a smartphone, and its McDelivery service hit its stride in 2019 when partnering with DoorDash (NYSE:DASH) brought delivery to more than 10,000 locations.

But McDonald’s wasn’t immune from the turmoil in the restaurant industry during the early days of the pandemic. With fewer commuters, the company’s breakfast business took a huge hit in the U.S. Sales also plunged in international markets where drive-thrus are less prevalent. Global comparable sales tumbled 7.7% in 2020.

Although the pandemic isn’t officially over, McDonald’s is staging a vigorous recovery. Global comparable sales soared 12% in the first quarter of 2022, with modest growth in the U.S. coupled with strong double-digit growth in international markets. Systemwide sales were up 10% year over year.

The investments McDonald’s made in its digital channels before and during the pandemic are also paying off. Systemwide digital sales in the company’s six largest markets topped $5 billion in the first quarter alone, accounting for almost one-third of total systemwide sales. The recently launched MyMcDonald’s Rewards loyalty program already has 21 million customers enrolled, providing a strong incentive to choose McDonald’s over the competition.

Shares of McDonald’s have soared well past their pre-pandemic high, but the stock remains a good choice for investors looking for a high-quality restaurant for their portfolios. With a price-to-earnings ratio of roughly 25 based on the average analyst estimate for 2022, it’s not too late to invest in this top-notch fast-food chain.

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