Jim Cramer has built his reputation around energized analysis of growth stocks and whatever is trending at the moment, mostly because that’s what his audience wants to know about the most. However, there are some rare cases where he discusses stocks that are more on the “boring” end, like McDonald’s (NYSE:MCD).
Cramer has not implied that the tech rally is ending, but he does believe that the AI trade is “breaking up” as investors think more critically. Put another way, if you are doubting some AI stocks and you’re paying too much for them right now, it’s probably a good idea to take some profits and move them elsewhere.
Having more exposure to recession-resistant stocks makes even more sense as AI-related tech stocks have ballooned to epic proportions. They have been making up a larger and larger portion of the S&P 500, and most companies in the Nasdaq-100 claim to be deeply involved in it.
What Cramer has to say about MCD stock
McDonald’s came up during the “Lightning Round” segment of the show when a caller named John from Arkansas asked for Cramer’s thoughts on McDonald’s stock price and dividend. The caller specifically asked about these in relation to commodity issues, mentioning “mad cow, avian flu, swine flu, and fuel shortages.”
Cramer was very bullish and responded with his signature “Buy, buy, buy!”
He gave two specific reasons for this optimism, with the first one being McDonald’s mobile app. He noted that it constantly provides customers with “doorbuster ideas” and deals every day, which drives traffic and sales.
The second is falling commodity costs. Addressing the caller’s concern about commodities, Cramer argued that cattle prices have peaked. He stated, “I think it was a generational high and it’s coming down.” Lower beef costs would improve McDonald’s profit margins.
Is MCD stock truly recession-resistant?
McDonald’s is a classic defensive stock that should ride out a future recession just fine. In 2008, everyone traded down to McDonald’s, and this caused MCD stock to actually gain 8.59% that year. The next recession happened in 2020, and McDonald’s also came out of it stronger, whereas most other businesses in the restaurant category were quashed by unceasing lockdowns and restrictions.
McDonald’s recession-resistance comes from a “trade-down” thesis. Consumers stop going to casual dining and instead trade down to cheaper fast food. McDonald’s gives them great value and a boatload of options to choose from.
Recent data shows exactly this phenomenon playing out. Higher-income customers are increasingly eating at McDonald’s due to inflation refusing to give way. At the same time, inflation has been cumulative for years. Eventually, prices hit a ceiling where the lowest-income consumer can’t afford any dining out, even fast food. This is why McDonald’s rushed to release the $5 Meal Deal and the “McValue” platform in mid-2025.
All in all, if a downturn hits tomorrow, MCD should fare much better than the vast majority of stocks and may even start gaining.
Should you buy MCD stock now?
MCD stock has what it takes to buck the trend the next time a downturn hits, though you are paying a price for it. It trades at over 25 times forward earnings, and the stock is only up by 3.3% over the past year. The forward yield is just 2.39%.
If all you are worried about is safety, then you might fare better by piling into treasuries. If you want a little more upside on top of that and you want the possibility of more upside if McDonald’s ends up benefiting from a recession, it is worth buying.
I agree with Cramer that this is not a stock that will disappoint you in the long run if you hold it and reinvest the dividends over decades. MCD is just two years away from being a Dividend King. You should expect to underperform near-term if the market keeps rallying.
Top Gaining Stocks
Top Losing Stocks