A recent pullback in the price of MCD presents a good opportunity to buy this dividend paying stock; paying about 3.08%.

  1. CHART- know how to read charts. We firmly believe I can improve the price of buying or selling from an understanding of chart action.   +1; MCD is below both 50 day and 200 day moving averages but the RSI line is beginning to diverge which might indicate a near term reversal
  2. ANALYSTS- read analyst reports but come to your own conclusions.  +1; 3 strong buy, 13 buy and 10 hold (according to CNBC)
  3. INSIDERS- if the people that know the company the best are not buying it, why should you?  0; not much insider action historically
  4. MANAGEMENT DISCUSSION 10Q AND 10K- this is the only truthful thing you will read about a company. It’s composed by management, the auditors, and the firm’s lawyers.  If all three of them can agree on the verbiage, it’s passed a big hurdle.  Read it carefully.  Pay particular attention to the Risks, Litigation, and Related Transaction sections.  These are the things you will wish you had taken the time to read if something goes bad with your investment.  +1; Continued growth and strong margins.  Management also predicted a rise in commodity prices, especially in the beginning of the year, but there may be reason to believe that commodities have peaked.
  5. RELATIVE PERFORMANCE- If the stock has a superior relative performance to the market in the short term  -1; underperformed in 2012 so far
  6. SECTOR OUTLOOK- buying a good stock in a bad sector can be a humbling experience 0; following market
  7. CASH FLOW- cash flow is more accurate than earnings. Earnings can be more easily manipulated.  +1, J.P. Morgan April 23,2012 research report  predicted that growth in FCF will be more than double the growth in earnings over the next two years
  8. PEG RATIO- it’s good to find a company growing faster than it’s multiple. -1 ; PEG ratio: 1.62 (according to Yahoo! Finance)
  9. Catalyst  –1; comps in April lower than expected
  10. Valuation  +1