McDonald's Corporation (MCD): A Bull Case Theory

We came across a bullish thesis on McDonald’s Corporation on wallstreetbets subreddit by nskidder. In this article, we will summarize the bulls’ thesis on MCD. McDonald’s Corporation's share was trading at $318.73 as of December 15th. MCD’s trailing and forward P/E were 27.02 and 23.92 respectively according to Yahoo Finance.

McDonald's Corporation owns, operates, and franchises restaurants under the McDonald's brand in the United States and internationally. MCD is far more than a fast-food chain; it is a dominant real estate and technology powerhouse that leverages its restaurants as cash-generating assets. With over 43,000 locations in 115 markets, the company owns roughly 45% of the land and 70% of the buildings, generating $42 billion in real estate assets.

Nearly 93% of restaurants are franchised, enabling MCD to collect rent and royalties—4% of sales in royalties plus 8–15% in rent—resulting in an exceptional 82% operating margin on franchise revenue. This model positions McDonald’s as a low-risk, high-margin landlord simulator, rather than a traditional food business, while maintaining a 2.24% dividend yield and producing substantial free cash flow.

The company’s ongoing digital transformation adds a significant growth catalyst. Partnerships with Google Cloud have introduced AI-powered systems across operations, including predictive scheduling, order verification, virtual management, and faster drive-thrus, which are already driving measurable revenue gains. McDonald’s loyalty platform, with 185 million active users, has boosted consumer engagement, and the company targets 250 million users by 2027, further monetizing its vast data ecosystem.

Expansion plans accelerate growth, with approximately 2,200 new restaurants opening in 2025 and a target of 50,000 locations by 2027, including 1,000 new stores in China alone. Each new unit increases rent, royalties, and data collection, compounding the company’s core profitability.

With a low beta of 0.52, high institutional ownership, and the combination of real estate, technology, and franchising strength, McDonald’s presents a compelling investment opportunity. Near-term stock price weakness is limited, while long-term catalysts—including digital initiatives, loyalty growth, and aggressive expansion—could drive shares toward $400+ by the end of 2026, offering an exceptional risk/reward profile.

Previously we covered a bullish thesis on McDonald’s Corporation by David in October 2024, which highlighted the company’s strong free cash flow, disciplined share repurchases, steady dividends, and long-term shareholder value creation. The company's stock price has appreciated approximately by 6.75% since our coverage. This is because the thesis played out through resilient capital returns. The thesis still stands as MCD continues to generate substantial free cash flow. nskidder shares a similar but emphasizes the company’s real estate dominance, AI-driven digital initiatives, and aggressive restaurant expansion.

McDonald’s Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 83 hedge fund portfolios held MCD at the end of the third quarter which was 78 in the previous quarter. While we acknowledge the risk and potential of MCD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MCD and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.