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McDonald’s Corporation (MCD) Gets the Thumbs Up from Wells Fargo

McDonald’s Corporation (NYSE:MCD) is on many traders’ watch-lists today after Jeff Farmer of Wells Fargo upgraded the fast food chain to ‘Outperform’ from ‘Market Perform’. Farmer also raised his target price to $145-$150 from the previous $125-$130, citing potential multiple expansion next year due to expected improvement in return on invested capital and margin gains. The analyst also likes McDonald’s Corporation (NYSE:MCD)’s mobile presence, which could potentially lead to market share gains ahead. As more millennials and teens order food from mobile phones, McDonald’s cutting edge mobile/payment technology could make a meaningful difference in terms of boosting demand.

After dipping late last year, shares of McDonald’s have outperformed, rallying 8.22% year-to-date. The stock currently trades for 19.75 times forward earnings estimates and yields 2.88%.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

Smart money sentiment surrounding McDonald’s Corporation (NYSE:MCD) was stable in the fourth quarter. Of the 742 elite funds we track, 55 funds owned $2.8 billion of McDonald’s Corporation (NYSE:MCD) and accounted for 2.80% of the float on December 31, versus 55 funds and $2.77 billion respectively on September 30.

The Bottom Line

McDonald’s Corporation (NYSE:MCD) is in the spotlight due to a Wall Street upgrade. For more reading, check out ‘12 Best Bargain Burgers and Fries in America‘.

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