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The world's most recognizable fast-food chain is expanding its presence in China. McDonald's Corp. (NYSE: MCD) announced on Tuesday that it plans to open 2,000 new stores in China over the next five years, bringing the total to about 4,500.
"China will soon become our largest market outside of the United States," said CEO Steve Easterbrook. That title currently belongs to Japan, with just under 3,000 stores.
McDonald's has about 37,000 stores worldwide and more than 14,000 in the United States.
Expansion in overseas markets is critical for the Illinois-based company, as U.S. sales have been dropping steadily in recent years.
The effect on McDonald's stock may be somewhat muted by the fact that earlier this year the company sold 80% of its interest in the Chinese market. Hong Kong-based Citic Ltd. and Citic Capital Holdings, along with U.S. firm Carlyle Group LP, acquired the majority of MCD's China business for $1.7 billion.
At the time, the firms had planned to open 1,500 new stores, so this new announcement is an upgrade on that earlier figure.
Money Morning Capital Wave Strategist Shah Gilani singled out MCD as a great play in a time when consumer spending is sputtering. "Sure, the company spent a little time in the wilderness thanks to an identity crisis, but it's back and ready to continue growing."
Shares are up 4.7% since then, compared to just 1.4% for the S&P 500.
MCD currently trades at $158.23 and pays a 2.38% yield.
Last week, biotech firm Galapagos NV (Nasdaq: GLPG) announced positive results from phase 2a clinical trials on a treatment for patients with idiopathic pulmonary fibrosis (IPF). Patients receiving once-daily treatment over 12 weeks showed a slight improvement on breathing tests, while those treated with placebo showed a continued decline.
Toby Maher, professor of respiratory medicine at Imperial College London, said the results "are extremely exciting and exceed those of previous studies. This brings hope to patients with idiopathic pulmonary fibrosis that new, effective treatment may be on the horizon."
Galapagos plans to move the drug into phase 3 trials immediately.
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The Belgian firm has received a number of analyst upgrades in recent months. Marketbeat.com reported last week that, of the 11 firms covering Galapagos, eight currently consider it a "Buy," with an average price target of $101.
Money Morning Executive Editor Bill Patalon recommended Galapagos to Money Morning readers in April 2012.
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Since then, the stock has risen 647.2%, compared to just 75.4% for the S&P 500.
Bill has renewed his recommendation for the Belgian biotech firm several times over the years, saying in 2016 that it has "an established history of piling on gains. " With an average gain of more than 100% a year, it's hard to argue with that.
Galapagos is at the very top of our Money Morning Top 10 Outperformers, shown below.
As of midday Monday, GLPG trades at $87.07. It's up 17.7% in the last week.
Retail dinosaur Fossil Group Inc. (Nasdaq: FOSL) turned in a better-than-expected earnings report last week, but that wasn't enough to keep shares from plummeting.
Earlier in the year, the Texas-based fashion company reported its first quarter of negative earnings this decade. Now it's got a streak going - but not one it wants, as earnings per share were -$0.23 in the most recent quarter. That was better than Wall Street expectations of -$0.33, but the report offered little reassurance to investors.
Fossil's worldwide net sales fell 13%, and guidance for the full year projected a drop of between 4.5% and 8.5%, compared to previous guidance of between 1.5% and 6%.
The company has made a big bet on wearable technology, debuting 95 smartwatches in 2016. But sales so far have not been able to make up for the decline in traditional watch sales. Fossil has been playing catch-up in an industry that has been considerably undercut by technology companies such as Apple Inc. (Nasdaq: AAPL) and FitBit Inc. (NYSE: FIT).
"We operate in a market and retail environment experiencing unprecedented disruption," CEO Kosta Kartsotis said in a statement.
Fossil is set to debut a slew of new smartwatches this year, both from its own brands and in association with brands such as Michael Kors Holdings Ltd. (NYSE: KORS) and Emporio Armani. Kartsotis believes the new products put the company "in the best position to take advantage of the convergence of fashion and technology."
Shah Gilani's take isn't so charitable. In June, he called Fossil a "once-trendy watch and accessories purveyor turned dinosaur crap retailer."
"At least we can give it foresight credit for getting its name right," Shah continued.
At the time, FOSL was trading at $10.84. After its ugly earnings report, shares are now down to $8.27 as of Monday midday, a loss of 24%. The price is now down 68% in 2017.
Subscribers to Shah's Zenith Trading Circle were able to get into a FOSL trade early and had already profited 58% by mid-June, when he wrote about the company on Money Morning. If you're not already a Zenith member, click here to find out how to get access to his latest profit plays on retailers.
For those following along with our Money Morning Top 10 Outperformers, here's the latest list:
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