You Can Find Better Food Stocks Than McDonald's

Nobody is bigger in the restaurant business than McDonald's (NYSE:MCD): it has more than 35,000 stores in 100 countries on six continents, and says its serves 70 million people a day. Since its founding in San Diego in 1954, the company is one of the classic rags to riches growth stories in modern U.S. business history. But if you're an investor, you want to know about McDonald's future, and, to be honest, it's nothing like its 60-year history. Instead of remaining on a sure-fire growth trajectory, the fast food chain is battling to maintain market share and revenue growth.

Not that it looks like MCD is in any real long-term trouble. Its financials are sound, it pays an attractive dividend that investors can count on, but future returns look lackluster compared to some alternatives, and I don't recommend investors look to MCD for a new position. The challenges for McDonald's start to appear in its recent stock performance compared to the stock market benchmark, the S&P 500, where the trend has reversed in the index's favor. For the five year period from 2004 through 2008, MCD clobbered the S&P with a total return of 150% vs. the S&P's loss of 18%. But over the following five years, MCD underperformed, with a total return including dividends of 71% vs. the S&P's total return of 116%.

Source: Seeking Alpha

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