Investors who have owned stocks since 2016 generally have experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return in the past five years is 125.7%. But there is no question some big-name stocks performed better than others along the way.
A Tough Path: One company that has struggled to keep pace since 2016 has been McDonald’s Corp (NYSE: MCD). But despite struggles along the way, McDonald’s investors have gotten some decent overall returns.
The company has faced some significant challenges in recent years, including souring public opinion on processed foods and a trend toward organic, healthy menu items. In 2015, former McDonald’s CEO Steve Easterbrook jump-started the company and its stock via his Experience of the Future initiative, which included a $6 billion commitment to restaurant remodels and a focus on technological innovation, such as kiosk, as well as app ordering and delivery. Easterbrook also spearheaded a corporate restructuring, a large-scale refranchising and a shift toward higher-quality menu items.
Unfortunately, Easterbrook was fired from the company in late 2019 after he had an inappropriate relationship with a coworker.
At the beginning of 2016, McDonald’s shares were trading at around $117. The stock hit its low point of the past five years in late 2016, dipping down to $110.33 before Easterbrook’s changes started showing up in McDonald’s sales numbers.
From that point, the stock steadily churned higher over the next several years, reaching $150 in mid-2017 and $200 for the first time in mid-2019.
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McDonald’s In 2021, Beyond: McDonald’s peaked at $221.93 in 2019 prior to Easterbrook’s departure and the COVID-19 pandemic sell-off, which pushed the stock back down to as low as $124.23 in March. Fortunately for McDonald’s investors, fast-food restaurants weren’t hit nearly as hard as casual and fine dining restaurants, and McDonald’s investments in its app and delivery options really paid off in 2020.
By late 2020, McDonald’s shares made new all-time highs at $231.91 before settling back down to around $213 today.
McDonald’s investors that bought and held on through a volatile five-year period turned a significant profit. In fact, $1,000 worth of McDonald’s stock bought in 2016 would be worth about $2,037 today, assuming reinvested dividends.
Looking ahead, analysts expect McDonald’s to continue its push higher in the next 12 months. The average price target among the 32 analysts covering the stock is $240, suggesting 12.5% upside from current levels.
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