{"id":35218,"date":"2013-01-10T12:39:49","date_gmt":"2013-01-10T17:39:49","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=35218"},"modified":"2013-01-10T12:39:50","modified_gmt":"2013-01-10T17:39:50","slug":"mcdonalds-is-the-microsoft-of-burger-joints","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/01\/10\/mcdonalds-is-the-microsoft-of-burger-joints\/","title":{"rendered":"McDonalds is the Microsoft of Burger Joints"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/a> <\/p>\n

If McDonalds (NYSE:$<\/span>MCD<\/a>)<\/b> were a tech company, it wouldn\u2019t be Apple (Nasdaq:$<\/span>AAPL<\/a>)<\/b> or Google (Nasdaq:$<\/span>GOOG<\/a>).<\/b>\u00a0 It would distinctly be Microsoft (Nasdaq:$<\/span>MSFT<\/a>)<\/b>.<\/p>\n

Yes, I realize that I\u2019m talking about the world\u2019s largest chain of burger joints, and it might seem odd to mention it in the same breath as America\u2019s top tech titans.\u00a0 But hear me out.<\/p>\n

Microsoft doesn\u2019t invent <\/i>anything.\u00a0 (I say this as a Microsoft bull, by the way.)\u00a0 It takes ideas developed by others and institutionalizes them.<\/p>\n

Think back in time.\u00a0 Microsoft didn\u2019t invent the personal computer platform, the GUI-based operating system, the spreadsheet, the word processor, the web browser, e-mail, web mail, voice-over-internet telephony, home video game consoles any of the other products and services it markets, yet it has a dominant position in all of them.<\/p>\n

Microsoft isn\u2019t an inventor.\u00a0 It\u2019s a very adept copier and institutionalizer of ideas invented by others. (On a side note, I expect that Windows Phone will eventually be another success that Microsoft snipes from Apple<\/a>.\u00a0 Time will tell; for now Windows Phone is off to a modest start.)<\/p>\n

This brings me back to McDonalds.\u00a0 McDonalds invented neither the hamburger nor the fast food concept. \u00a0(Their burgers are barely edible, in my opinion.)<\/p>\n

But Ray Kroc & Co. built a scalable system that has come to define both in the minds of many.\u00a0 And over the decades, McDonalds has had a rare talent for adapting its menu to changing consumer tastes.\u00a0 The Happy Meal, Chicken McNuggets, and McRibs were only the beginning.\u00a0 As Americans became more health conscious, McDonalds started selling salads for the parents to eat while the kids played on the playground.\u00a0 And as Americans have gone upscale in the coffee drinking habits in recent years, McDonalds stole a few plays from the Starbucks (Nasdaq:$<\/span>SBUX<\/a>) <\/b>playbook by launching its McCafe concept.<\/p>\n

\"McDonalds\"<\/a><\/p>\n

And let\u2019s not forget, McDonalds was an early investor in Chipotle Mexican Grill (NYSE:$<\/span>CMG<\/a>)<\/b>\u2014a restaurant that I now cannot fathom living without.<\/p>\n

Right now, Buffalo Wild Wings (Nasdaq:$<\/span>BWLD<\/a>)<\/b> and Wingstop must be watching McDonalds very closely.\u00a0 Micky D\u2019s recently announced that it would be expanding a test of its Mighty Wings<\/a> in some of its Chicago locations.\u00a0 If successful, McDonalds could start selling hot wings nationwide, at least as a seasonal offering.<\/p>\n

I\u2019m not suggesting that McDonalds will put either of these companies out of business any more than I would suggest that McCafe is a serious competitive threat to Starbucks.\u00a0 I do, however, see it as another example of McDonalds doing what it does best: taking a concept developed elsewhere and massively scaling it.<\/p>\n

McDonalds share price has lagged over the last year, falling roughly 10% over a period in which the market was up by more than 10%.\u00a0 At 15 times expected earnings, McDonalds shares are not \u201ccheap,\u201d but neither are they particularly expensive for a company of McDonald\u2019s quality.\u00a0 I would be comfortable buying McDonalds on any significant dips.<\/p>\n

I should also add that McDonalds pays a respectable dividend of 3.4% and that it is a serial dividend raiser.\u00a0 The stock\u2019s dividend has more than doubled since 2008.\u00a0 Not too shabby in a world starved for quality yield.<\/p>\n

Disclosures: Sizemore Capital is long MSFT.<\/p>\n

SUBSCRIBE <\/a><\/strong>to Sizemore Insights<\/em>\u00a0via e-mail today.<\/p>\n

The post McDonalds is the Microsoft of Burger Joints<\/a> appeared first on Sizemore Insights<\/a>.<\/p>\n

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