MCD

O

oldnemesis

http://www.usatoday.com/story/money...nalds-reit-plan-shareholder-meeting/75520936/

http://www.thestreet.com/story/1335...ve-on-real-estate.html?puc=yahoo&cm_ven=YAHOO

http://finance.yahoo.com/q/ks?s=MCD+Key+Statistics

http://stockcharts.com/h-sc/ui?s=mcd

Trade:
MCD closed at 113.22
Jun 95/90 bull put spread for a net credit of $61
Yield = 61/439 = 13.9% in 220 days or 23% annualized
Prob = 83%
Expectation = .83(61) - .1(439) -.07(220) = 50.6 - 43.9 - 15.4 = -8.7

Price............. Profit / Loss......... ROM %
70.00................ (439.00)............ -86.10%
85.00................ (439.00)............ -86.10%
90.00................ (439.00)............ -86.10%
94.39..................... 0.00................ 0.00%
95.00................... 61.00............... 13.90%
100.00................. 61.00............... 13.90%
111.62................. 61.00............... 13.90%
125.00................. 61.00............... 13.90%
150.00................. 61.00............... 13.90%

This is probably a viable trade as it is but I think MCD is in a little bubble here generated by the expectation that there was going to be a REIT windfall which now turns out not to be so. MCD is at a PE of 24.5 which is too high for MCD. I think it will fall back to a more realistic PE before Christmas...which will be a better time for this trade.
 
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MCD no REIT, move would be risk and not offer investors enough upside. MCD gets chunk of its revenues from the rent from franchisees.
 
Had two Burger King breakfast burritos the other morning and they were 100% better than McDonalds. Their hash rounds beat out the hash brown too! After getting cold burgers the last two times at McDonalds I'm banning them from my fast food selection.
 
Last year a Consumer Reports survey rated the McDonalds hamburger as the worst burger in the US.

https://www.washingtonpost.com/news...rts-mcdonalds-burger-ranked-worst-in-the-u-s/

People hate that crap.

Yet McDonalds proudly points to 'billions and billions' served.

Why the disconnect?

Well, from where I live today there are two McDonalds within easy driving. The places that have the best burgers are not easily available to me. McDonalds works by saturation and availability...certainly not by food quality.

Is that going to change? Not in the near future.

McDonalds has weaved itself into the fabric of American life. All too often I leave the house without breakfast, drive into McDonalds, go to the drive-up window and get a breakfast sandwich and eat it on the way to my destination. It's not the best food but its there and its quick.

As for the stock:

http://stockcharts.com/h-sc/ui?s=mcd

I'm still watching. I would like to see it back around 100.

BTW: if you do the same as me there is an alternative:

http://www.jimmydean.com/products/sandwiches/sausage-egg-cheese-croissant-sandwiches

Buy a box of frozen croissant-sandwiches, pop one in the microwave before you take your shower and bingo you've made your own crap at about half the price.

I have a box of these in my freezer right now. The sandwich is just as good (or bad) as the one MCD dishes out.

Next step if for Jimmy-dean (Tyson) to make a frozen quarter-pounder. Then it's all over but the screaming.

Stuff you can buy today at Walmart:

http://www.walmart.com/browse/food/frozen-sandwiches/976759_976791_1044113


uh-oh MCD better look out!!!
 
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