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McDonald’s — Why One Analyst Is Lovin' It

Although McDonald’s recent rally in the stock market has pushed its shares to trade at all-time highs, one analyst still maintains a "buy" rating on the fast-food giant as investors flee to safety stocks.

"It’s had a strong rally in the last week or so," said Matt DiFrisco, managing director and senior restaurant analyst at Lazard Capital Markets. "Still, it does a very good dividend yield though — second in the space there only to Darden . You can still make a very good return off of it."

Although Lazard Capital Markets has moved McDonald’s from its Fresh Ideas list, it still has a "buy" rating on the stock along with a $99 price target.

"This has certainly been a very predictable top-line grower," he said. "Margins — certainly not a concern... If anything, I think it’s pretty clear that McDonald's has managed their margins in a tough commodity environment, and they’ve shown some pricing power and they’ve taken some share."

Although a surge in commodity prices has led grocery stores to pass along the increases to consumers, McDonald’s has kept its price increases to less than 3 percent.

Part of the key to the company’s success has been its re-imaging campaign, DiFrisco said. He added that its remodeling campaign has enabled it to perform well in Europe.

On Thursday, the company reported better-than-expected sales in November as stores open at least 13 months rose 7.4 percent globally. The gain was boosted by big increases in Japan, China and Europe.

The company’s revenue was also boosted by its Peppermint Mocha drink and the popular limited-edition McRib. DiFrisco explained that beverages keep the company contemporary and can bring in new customers that might not have thought of visiting McDonald’s before.

Additional News: McDonald's November Sales Beat the Street

Additional Views: Raymond James Analyst Discusses McDonald’s

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Disclosures:

Lazard Capital Markets makes a market in the shares of McDonald's.

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CNBC Data Pages:

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