McDonald's stock represents one of the most well-known brands in the world. It's fast food restaurant chains revolutionized an industry and earned customers throughout the world. McDonald's is currently headquartered in Oak Brook, IL, but serves its customers in over 100 countries throughout the world. The Mcdonald's stock has been a favorite of investors going into 2008, primarily because of its ability to drive growth. One of the main drivers of growth, and one that investors are banking on, is its new premium coffee line. McDonald's stock used to include other fast food joins like Chipotle and Boston Market, but the majority interest in each of those investments has been sold. Neverthless, investors in McDonald's stock still own a piece of over 31,000 restaurants worldwide. McDonald's stock competitors include Burger King (NYSE: BKC), Wendy's International (NYSE: WEN), Jack in the Box (NYSE: JBX), and now one could argue Starbucks (NASDAQ: SBUX).
Before considering an investment in McDonald's stock, investors should consider some key risk factors to the company's business model. One of the most pressing on margins right now is the increase in food costs. Commodity prices ran up across the board in 2007 and early 2008, putting some pause into the run up of McDonald's stock. In addition, one often overlooked aspect of McDonald's business is its international business. It has become such a huge part of the company, that offering acceptable, varied, and updated menu items to a diverse group of international customers will be key to the company's success. Needless to say, the Value Menu in downtown Manhattan looks much different than the one in Beijing, China.
Those risks aide, McDonald's stock is an appealing investment to many long term investors. Its international exposure has gone a long way to insulate it from possible US recessions and the strength of its global brand are so impressive. The company maintains a solid A S&P credit rating and continues to increase its dividend which has ranged from 2-3% depending on the current price. The Beta of the stock has run up a bit, mostly because of the stock's own parallel run-up which has led to increased volatility. The company definitely is valued as a growth stock and investors will need McDonald's to continue to execute its plans for growth to ensure appreciation of shareholder value.