There is no hiding the truth: McDonald’s Corporation (NYSE:MCD) has been killing it in the food sector.

Once known for its greasy and unhealthy junk food offerings, McDonald’s has reinvented itself to be more appropriately adjusted to today’s health-conscious consumer, while maintaining its low-price attractiveness.

Its a winning combination that has the stock soaring. MCD stock is up 45% over the past year. That compares favorably to 30% gains for both Yum! Brands, Inc. (NYSE:YUM) and Domino’s Pizza, Inc. (NYSE:DPZ). It also compares favorably to Jack in the Box Inc. (NYSE:JACK), Chipotle Mexican Grill, Inc. (NYSE:CMG), and Papa John’s Int’l, Inc. (NASDAQ:PZZA), all of whom are down over the past 12 months.

In fact, MCD stock’s 45% gain over the past year is one of the best marks in the entire food sector.

Here’s the simple takeaway: McDonald’s is dominating the fast casual food industry, so the stock is outperforming.

This trend will persist. Here’s why.

The New McDonald’s

McDonald’s President and Chief Executive Officer Steve Easterbrook said it best at the top of the company’s second-quarter press release: “We’re building a better McDonald’s and more customers are noticing.”

That is exactly what is happening. The old McDonald’s was a place that served cheap food of questionable quality. It was all about price and convenience. The new McDonald’s is quite different. They serve cheap food of much improved quality. Its all about price, convenience and health.

The company has revamped the menu with premium, healthier offerings. They’ve swapped out frozen beef for fresh beef on a lot of their items. They have set sustainability targets, making the company appear more green and environmentally friendly.

Adding this health and environmentally friendly component to the mix has made all the difference for MCD stock. The proof is in the numbers. Comparable sales growth has turned consistently positive, and it is accelerating against the backdrop of a struggling restaurant industry. Earnings growth is ramping, and long-term earnings growth estimates are as strong as they’ve been in five years.

Why?

Because MCD is succeeding in the overlap of health and price. They aren’t the Whole Foods Market, Inc. (NASDAQ:WFM) of the fast casual sector. But they also aren’t the Wal-Mart Stores Inc (NYSE:WMT), either. They are somewhere in between, offering food with a wide range of quality for low prices.

Consumers are flocking to this. And they won’t stop flocking any time soon.

Taco Bell is stepping up its game by creating a more robust dollar menu offering, but those offerings (like Nacho Fries) don’t really have the health element that some of MCD’s offerings offer. Outside of that, competition in the overlap between health and price remains relatively muted. McDonald’s is simply running away with that huge-demand market.

Valuation Is Reasonable

On the valuation front, MCD stock is pretty expensive. It’s trading at 27-times this year’s earnings estimate for earnings growth projections of just 10% per-year over the next two years. That is a big multiple for not that big of growth. The 170% premium (27 divided by 10) seems pretty rich.

But MCD stock has always sported a rich valuation. Its average forward earnings multiple of the past 5 years is 19. The S&P 500‘s average forward earnings multiple over the past 5 years is just 16. Granted, the current discrepancy in valuation (25-times forward estimates for MCD stock versus 18-times forward estimates for the S&P 500) is unusually wide.

But MCD’s growth prospects are also better now than they have been over the past five years. Part of that is due to McDonald’s finding success in the overlap of price and health. Another part of it is the forthcoming tax reform tailwind, which should be huge for MCD stock (the company’s effective tax rate consistently hovers above 30%).

Bottom Line on MCD Stock

MCD is the best play in the fast casual restaurant sector. The company continues thrive in the overlap of price and health. The valuation remains reasonable. And the company stands to benefit big from tax reform.

All together, MCD stock should head materially higher in 2018.

As of this writing, Luke Lango was long MCD and YUM.