At Extreme Investor Network, we are always on the lookout for investment opportunities that offer potential for high returns. Today, we want to talk about how McDonald’s $5 value meal offering could provide a turnaround for the struggling stock, according to Wells Fargo.
The $5 value meal deal, which includes a McChicken or McDouble sandwich, four-piece chicken nuggets, small fries, and a small drink, debuted on June 25 and is set to run for a month. This offering comes at a time when McDonald’s shares have fallen about 15% year to date due to higher prices and lower sales in the Middle East, resulting in weaker same-store sales in the first quarter.
Wells Fargo believes that history could be a guide in predicting the impact of this value meal on McDonald’s stock performance. The bank looked at four of McDonald’s previous value meal launches in the U.S. and found that McDonald’s managed to outperform the S & P 500 by around 75% in the four years after launching its Dollar Menu during a difficult consumer recession.
Analyst Zachary Fadem notes that McDonald’s competitors took a hit after the company launched the dollar menu and regained some share after it was removed. Fadem forecasts that the $5 value meal could provide a tailwind of 50 to 100 basis points for McDonald’s U.S. comparable same-store sales, potentially boosting sentiment towards the stock.
In addition to the value meal, Fadem believes that fading Mideast conflict headwinds and the upcoming Olympics could also drive the stock in the second half of the year. Wells Fargo has an overweight rating and a $300 price target on shares, implying about 18% upside from Friday’s close.
At Extreme Investor Network, we are excited about the potential of McDonald’s $5 value meal to rejuvenate the struggling stock and provide opportunities for investors to capitalize on this turnaround. Keep an eye on our website for more insights and investment opportunities in the market.