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Expert opinion: ‘McDonald’s is core holding you want for recession’

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McDonald’s Corp (NYSE: MCD) is a must-have for times of recession, says Lee Munson. He’s the Chief Investment Officer at Portfolio Asset Management.

Why Munson is bullish on McDonald’s stock

Shares of the fast-food chain are struggling to come out of the “red” this year, which, as per Munson, is all the more reason to secure a position in McDonald’s. On CNBC’s “Power Lunch”, he said:

What I love about McDonald’s is that they control their suppliers. They serve more food than any other corporation on this planet. They also have the muscle to try to capture some people that are going a bit lower on the rungs.

In late April, McDonald’s higher prices and strong international sales helped it perform better-than-expected in the fiscal first quarter. The stock trades at a PE of 21 at present.

McDonald’s Corp held its own in 2008

Munson remains constructive on McDonald’s also because it did well during the global financial crisis of 2008. He, therefore, expects it to do the same in the upcoming slowdown as well.

This is the core holding you want for a recession. Remember 2008, McDonald’s was up 11% that year. Its big decline was only 20% while something like a Chipotle went down 70% plus in the great financial crisis.

The U.S. economy unexpectedly shrank at an annualised pace of 1.40% in the first quarter of 2022. Wall Street, on average, sees a little under 15% upside in MCD from here.

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