My bank is next to a McDonald's (NYSE: MCD). Every time I pull into the bank parking lot, regardless of what time of day it is, the drive-through line at McDonald's is at least six or seven cars deep. With every passing year, the line seems to get longer. And it always makes me think: Man, that company is a cash cow (literally).
So it's no surprise to me that McDonald's stock is trading at an all-time high. In fact, the blue chip stock has been setting new highs for years now, more than doubling from $43 a share in early 2007 to $98 a share today.
Just in the last two days McDonald's stock is up nearly 2% on news that the fast-food giant's same-store sales increased 7.4% in November. The stock is up 28% for the year and 14% in the last two months. The company's year-to-date operating income is up 9%, its earnings per share are up 10% and it currently pays an annual dividend of $2.80. You get the picture. McDonald's is doing very well.
There's a reason why. In an era when money is tight for the average person, many are shunning more expensive restaurants for cheaper, faster alternatives such as McDonald's. And as the global economic forecast remains grim, that trend should continue. Earlier this week Fitch Ratings said that it expects fast-food chains to outpace other areas of the restaurant industry in the coming months.
Given that McDonald's is by far the most successful and recognizable name in fast food, with a market capitalization that now exceeds $100 billion, the blue chip stock should continue its meteoric rise into 2012.
Meanwhile, the drive-through line next to my bank will keep getting longer.