The past two days have been weak for shares of McDonald's (MCD) , and I am looking to buy more. My buy point is $55, so we are getting close.
The company presented at an investor conference yesterday, and there wasn't any new information from the company. Still, the stock is off $2 in the past two days. The company acknowledged that the environment is challenging; it sees higher raw material costs and a potential slowdown from the consumer. But management was clear that it is building on its strong foundation of industry dominance, extended menu and value pricing.
In the U.S., the company is operating from a position of strength. New product introductions and a focus on add-on purchases -- such as sweet tea, iced coffee and value fountain drinks -- will help drive traffic. Beverage captures higher profits and will help to offset commodity pressures. It will also use its scale to continue to leverage its supply infrastructure, also helpful in combating higher costs. Drive-thru business (65% of sales) will continue to be an important growth driver and the rebuilding and reimaging of 5,550 stores should lead to higher sales.
In Europe, (40% of operating income) the market growth for the next five years is projected to be 10%. The company has seen no slowdown in its sales. Its strategy is to focus on three things: enhancing local relevance, upgrading the customer experience and building brand transparency. It will refranchise restaurants throughout Europe, with an emphasis in the U.K.; develop new products that focus on the core value customer; and increase drive-thru business.
The story is intact as the management executes its strategy for future growth. Sales numbers come out on Monday, and that may be why the stock is acting poorly, or maybe it's concerns about the consumer overall. But given the diverse geographic locations (13,800 sites in the U.S.), its strong value platform and growing international business, I think the story remains solid. I am looking to buy more shares at around $55, as my cost basis is $50.
Regards,
Jim Cramer
DISCLOSURE: At the time of publication, Cramer was long MCD.
Send email to james.cramer@thestreet.com.