There’s no perfectly safe investment in the stock market. If we had to identify a safety-focused asset, however, then shares of McDonald’s (NYSE:MCD) would be a great pick, as MCD stock has historically rebounded from one macro-level crisis after another.
Think about it: America has endured through the Great Recession and the Covid-19 pandemic, and so has McDonald’s. Even during the toughest of times, people can’t get enough of the Big Mac and those famous McDonald’s fries.
MCD stock is resilient, but it’s also down from its peak price. Still, it would be a shame if McDonald’s loyal investors were to abandon the company now.
If anything, this should be a time to stay in the trade, and possibly even add to one’s position. As we’ll see, geopolitical turmoil — tragic as it is — won’t stop McDonald’s from serving up shareholder value.
MCD Stock at a Glance
I challenge you: show me a time when MCD stock didn’t recover from a drawdown. You can’t do it, because the stock has historically always staged a comeback sooner or later. And by the way, while you’re waiting for a share-price recovery, you can collect some delicious dividend distributions. Currently, McDonald’s pays a forward annual dividend yield of 2.43%.
Now, let’s talk about the price action of MCD stock. On Jan. 6, it peaked at a 52-week high of $271.15. Fast-forward to mid-March, and the stock was trading at around $227. So, if you’ve been waiting for a decent-sized pullback, you finally got one.
If anything, this only makes MCD stock a better value. McDonald’s trailing 12-month price-to-earnings ratio is 22.6x, which is quite reasonable.
In other words, there’s something here for both income-focused investors and value seekers to feast on.
Acknowledging the Challenges
Temporarily, McDonald’s has closed 850 stores in Russia. This is, of course, in response to the ongoing geopolitical crisis.
We can’t pretend that this won’t have a fiscal impact on the company. McDonald’s plans to continue paying its 62,000 employees in Russia, so that could be a financial overhang for a while. But we can actually put a dollar figure to this. Reportedly, “[c]losing of stores in Russia will cost the company nearly $50 million per month.”
CEO Chris Kempczinski was forthright about the uncertainty of the situation. “At this juncture, it’s impossible to predict when we might be able to reopen our restaurants in Russia,” he said.
Still, the financial markets are fairly efficient. The financial impact of the temporary restaurant closures has, most likely, already been priced into MCD stock.
McDonald’s in the Metaverse
With the understanding that geopolitical crisis situations tend to get resolved sooner or later, you don’t have to let the turmoil shake you out of the trade. One thing we can say with confidence is that these challenges aren’t preventing McDonald’s from serving the customers’ needs and demands.
Among these demands, evidently, is a metaverse-friendly restaurant experience. Can an old company effectively move into the futuristic world of the metaverse, though?
Indeed, it can. According to trademark attorney Josh Gerben, McDonald’s is “headed to the metaverse”: “The company has filed 10 (TEN!) trademark applications indicating it plans to offer ‘a virtual restaurant featuring actual and virtual goods’ and ‘operating a virtual restaurant featuring home delivery.'”
Don’t worry — the food will be real and edible. McDonald’s may, however, offer up virtual events, such as virtual concerts, with your meal in the near future.
It’s amazing to consider that McDonald’s can be on the cutting edge of the metaverse. It just goes to show that an old company can keep up with modern technology. Meanwhile, the situation in Russia can’t be ignored. However, MCD stock has already corrected to the downside as the financial impact is a known factor.
In the final analysis, you don’t have to panic-sell your McDonald’s shares. It’s perfectly fine to stay in the trade, collect the dividend payments and, hopefully, enjoy the taste of robust profits in the end.
On the date of publication, Louis Navellier had a long position in MCD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.