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5 Reasons McDonald's Is a Buy

McDonald's has outperformed the market in recent months, with 11% gains year-to-date compared with a 3% slide in the broader market.

By Jeff Reeves of InvestorPlace

McDonald's

(MCD) - Get Report

stock is one of the few blue chips that has really

outperformed the market

in recent months, with 11% gains year-to-date compared with a 3% slide in the broader market.

Over the longer term, McDonald's strength is equally impressive, with McDonald's stock up more than 21% in the last 24 months while the major indices have lost about 20%. This is clearly a stock to buy, with great earnings and sales that proves McDonald's has staying power.

Here are five reasons that MCD stock remains a great investment today, and should serve investors well going forward.

McCafe coffee sales soar.

Just a few days ago, we learned that for the month of May same-store sales at MCD locations in the U.S. saw 3.4% better performance over the previous year. McDonald's credited this to the recent additions of Frappes to its McCafe menu, the latest success story in a coffee line that has allowed McDonald's to tap into billions of sales worldwide it would have ceded to others like

Starbucks

(SBUX) - Get Report

. Some reports indicate McCafe coffees create an extra 15% in revenue for MCD locations.

McDonald's earnings impress.

On April 21,

McDonald's first-quarter earnings

really impressed the stock market with a profit of $1.09 billion, or $1 a share. That number was up substantially from the $979.5 million, or 87 cents per share earned in the same quarter a year ago. Total revenue for MCD stock, including receipts from its franchised restaurants, rose 10% to $5.61 billion. Both bottom- and top-line numbers in this

MCD earnings report

easily bested consensus estimates calling for earnings per share of 96 cents on revenue of $5.53 billion.

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MCD global sales are strong.

The biggest gains in the stellar quarter came from a hefty increase in global same-store sales, which jumped 4.2%. The strong international showing included a gain of 5.2% in Europe, and a 5.7% gain in the Asia/Middle East/Africa region. Even U.S. same-store sales, a number that's struggled to keep pace with international growth, were higher in the first quarter. Part of the reason why McDonald's has such strong appeal overseas is because the company understands that its continued success depends on adaptation to local tastes. The company isn't averse to changing menu offerings to cater to provincial tastes, and as such McDonald's has managed to populate the globe with its Golden Arches.

Value Meal valuations.

Not only are McDonald's Value Meals a good deal, the company's shares also are a good value. MCD shares currently trade at about 16 times earnings as the shares hit new 52-week highs at the end of April before the May swoon caused shares to roll back a bit. That relatively low P/E ratio is right in line with rival

Burger King Holdings

(BKC)

that trades at under 14 times earnings, and

Yum Brands

(YUM) - Get Report

, which trades at just shy of 18 times earnings.

MCD stock serves profits in good times and bad.

The economy is improving, and consumers are starting to spend money again. But what happens if the economy turns south and we enter double-dip recession territory? If that happens, you'll want to own a company that's proven it can deliver solid earnings in both good times and bad. McDonald's has boosted its earnings seven of the last eight years, and the company now has seen 83 consecutive months of strong same-store sales. So if consistency, and shelter from another economic downturn, is what you want, look no further than MCD. Besides, the MCD stock also has a high dividend yield and

McDonald's is one of the top 10 dividend stocks in the Dow.

That means even if shares see short-term trouble, you can still bank on a payday.

As you can see, there are plenty of great

reasons to order up McDonald's shares.

So if your portfolio craves fast-food profits, you can't go wrong at the Golden Arches.

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