Talking Numbers

Why investors could start lovin' McDonald's

Why investors could start lovin' McDonald's

Americans had a little more trouble getting to their local McDonald's last month but the rest of the world showed they love Big Macs almost as much as they love soccer.

According to McDonald's, sales were up 1.2% in January worldwide compared to last year for its restaurants operating for at least 13 months.

Yet sales weren't uniform worldwide. European McDonald's restaurants were up 2% while Asian/Pacific, Middle Eastern, and African Mickey D's showed a 5.4% growth from January 2013. That growth wasn't matched in the US, where sales were down 3.3% compare to last year. The US accounts for about one-third of the company's revenues.

The company said weather was to blame, as was its menu. In a statement, the company said:

"In January, U.S. comparable sales decreased 3.3% amid broad-based challenges including severe winter weather. During the month, the U.S. featured the breakfast line-up and Dollar Menu & More value options. Across the U.S., McDonald's is focused on regaining positive momentum with customer engagement, menu choice and operations excellence initiatives designed to enhance the customer experience."

(

The company went on to note that China was one of the driving forces for its international growth. McDonald's said this year there aren't the same worries about contaminated chicken in China as there were in 2013.

CNBC contributor Andrew Busch, editor and publisher of The Busch Update, says the company's emphasis on its McCafé brand will make things harder on the company given rising coffee prices.

"They're banking on increased coffee sales," says Busch who notes that coffee bean prices are up significantly so far in 2014; though coffee dropped 19% in 2013, it's up 31% in the last three months. "As McDonald's is trying to shift to having more people go in to buy coffee, the price is going up…. This does not help their mojo going forward."

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, says that while McDonald's underperformed the benchmark S&P 500 index in 2013 (the restaurant was up less than 10% while index was up 29%), long-term technicals make the stock a buy in his view.

"Last week, we touched and held an area of support which has held for over 10 years – that's extremely significant," says Ross. "I'm referring to the 150-week moving average. Each time we tested it and held over the past decade, it's proved to be a compelling buying opportunity for the stock. Given the magnitude of the decline, I think history repeats itself. You want to be a big buyer down here."

(Watch: Bad news priced in McDonald's: Analyst)

The 150-week moving average is currently at $92.91, a level tested last Wednesday. The stock has since rebounded and traded around the $95 on Monday.

"I think that bounce continues," says Ross. "You want to remain a buyer on McDonald's."

However, Busch believes investors should hold off on buying McDonald's stock until US same-store sales grow instead of contract.

"I would just until you see same store sales go up," says Busch. "It's three months in a row that it's been down, so I would wait."

To see the debate on whether McDonald's is a buy with Busch on the fundamentals and Ross on the technicals, watch the video above.

More from Talking Numbers:

Recent sell-off has retail investors freaking out
Why Goldman sees trouble ahead for housing
These two charts say sell this highflying stock


Follow us on Twitter: @CNBCNumbers
Like us on Facebook: