3 Stock Target Price & Analysis: McDonalds, Coca Cola, Southwest | Summary and Q&A

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August 8, 2022
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Everything Money
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3 Stock Target Price & Analysis: McDonalds, Coca Cola, Southwest

TL;DR

McDonald's, Coca-Cola, and Southwest Airlines are dominant companies in their respective industries, and this analysis examines their growth potential, financials, and potential investment value.

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Key Insights

  • 🌥️ McDonald's growth potential in countries like China is significant due to their large populations and untapped markets.
  • 😋 Health concerns associated with McDonald's food have not deterred the author, who believes in enjoying it in moderation.
  • 🤗 McDonald's growth plan revolves around opening more locations to drive franchise fees and increase revenue.
  • ❓ The company's declining revenue in recent years should be examined in more detail to understand the underlying reasons.
  • 🥶 Coca-Cola's dividend yield is at 2.7%, which consumes a significant portion of its free cash flow.
  • 🌸 Southwest Airlines' financials have been negatively impacted by the COVID-19 pandemic, resulting in a loss in revenue and profit.
  • 😑 Southwest's future growth potential relies on its ability to return to pre-pandemic levels and its capital needs for expansion.

Questions & Answers

Q: What is McDonald's growth potential in China?

With a population of 1.6 billion, China has a significantly lower number of McDonald's locations compared to the United States, indicating significant growth potential for the company in the country.

Q: How does McDonald's address the health concerns associated with its food?

While McDonald's has faced criticism for its food's health implications, the author states that they personally enjoy McDonald's in moderation and believes that the occasional indulgence does not significantly impact their overall health.

Q: Does McDonald's have a growth plan for opening more locations?

Yes, McDonald's relies on franchise fees for revenue and plans to open more locations in the next three to five years to drive sales and increase their franchise fees.

Q: How has McDonald's financial performance been in recent years?

McDonald's revenue has declined in the past decade, and the company has disposed of several assets along the way. The analysis calls attention to this trend and suggests further investigation into the reasons behind the decline.

Summary & Key Takeaways

  • McDonald's growth potential lies in its expansion opportunities in countries like China, with its huge population and untapped market potential.

  • The health aspect of McDonald's is a concern, given the criticism it has faced in the past. However, the author personally enjoys McDonald's in moderation.

  • McDonald's growth plan revolves around opening more locations, as its revenue is largely driven by franchise fees.

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