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McDonald's Now on the Value Menu

It also looks as if the company's decision last quarter to drop items such as chicken selects and the fruit and walnut salad was a smart move. These changes come as the company recently added new breakfast items, including egg white sandwiches and chicken wraps, along with various Dollar-Menu offerings.

In that regard, I believe McDonald's remains unparalleled when it comes to strategic pricing and outside-the-box thinking. Management never wastes time trying different things, nor do they hesitate to pull items off the menu that are not performing as expected.

It is this mindset, along with the company's ability to innovate and its continued focus on service and value, that leads me to fully expect McDonald's to emerge from this rough patch with solid long-term profits.

I'm not pretending that the company's near-term struggles don't matter. But I believe it's pointless and narrow-minded to assess McDonald's on the basis of one quarter or even one fiscal year.

And I do see an opportunity here for McDonald's to overcome its near-term growth struggles, especially with the rising popularity of its dollar menu.

Remarkably, though, if you ever walk into any McDonald's during a lunch hour, you likely wouldn't be able to tell that the company was experiencing such underlying struggles, which is a testament to its sound management. To that end, I believe investors with patience can do well taking a position in McDonald's.

Very few companies have as strong a balance sheet and I believe that margins will improve. At around $95 a share, I see the stock as cheap on the basis of 10% long-term free-cash-flow growth rate. I believe that the stock will regain its $100 mark before the end of the year and enter 2014 with gourmet results.

At the time of publication, the author held no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a co-founder of StockSaints.com where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense.

His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio.

His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets.

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