Stop Trading!: The Right Price for McDonald's
McDonald’s is a buy at $50, Cramer said during Thursday’s Stop Trading!. At that price, Wall Street’s concerns about the company will be baked into the stock, taking out much of the risk.
McDonald’s has a “tremendous growth area” in Russia, Cramer said, where the company expects to open 40 new stores. Mickey D’s is making a big move into China as well. With great management in CEO James Skinner and commodity costs coming down, Cramer thinks the stock looks attractive.
Analysts’ negative sentiment toward MCD has brought the share price down. They’ve been less enthusiastic about the move into Russia and more concerned about those costs. But Cramer thinks the only real concern is a strong dollar, which could reduce overseas earnings once they’re converted. While he wouldn’t recommend the stock at $62, “a lot of those risks are taken out” once it reaches $50. MCD is presently trading at about $53.
Cramer stood behind Chubb’s dividend increase, saying the company’s management has been conservative throughout this downturn, which allows for such a shareholder-friendly move. Plus, Chubb, a property and casualty insurer, doesn’t deal in life insurance or annuities. “Travelers is even better,” Cramer said.
Lastly, Cramer said President Obama’s changes to Medicare are turning health-care providers like Humana into nonprofits.
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