A Tasty Treat for McDonald's

Focus: STOCKS

Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

A surprise earnings beat from the global fast-food giant boosted its stock price to $93, but MoneyShow's Jim Jubak, also of Jubak's Picks, digs deeper to find the reasons behind the good news.

A jump in December sales looks like it bailed out McDonald's (MCD) fourth quarter earnings, reported yesterday. Earnings climbed to $1.38 a share from $1.33 in the fourth quarter of 2011. Wall Street analysts were looking for $1.33 a share. Analysts had forecast a 1.8% drop in December same-store US sales and instead the company reported a 0.9% gain.

The question, if you own McDonald's (MCD) (the stock is a member of my Jubak's Picks portfolio.) is why? Do December results represent a one-time boost from company's decision to keep more stores open on Christmas than in 2011 and a shift of a limited-time offering of the popular McRib sandwich to December? Or is there something more lasting in the unexpected December increase?

Actually, it looks like the December surprise might be the result of price cuts that McDonald's (MCD) implemented in November that opened a small but significant gap between McDonald's (MCD) and its competitors.