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McDonald's & Citigroup: Stocks to Consider Amid Selloff, Earnings Season

Ryan McQueeney
After a huge market-wide selloff on Wednesday, Ryan McQueeney is putting two dividend-paying stocks in the spotlight: McDonald's (MCD) and Citigroup (C). Could a major restaurant stock and a big bank be the best way to rebound from this week's selling?

U.S. stocks suffered their worst day in eight months on Wednesday, plummeting from near all-time highs amid rising bond yields and inflation concerns. The Dow shed more than 800 points, and the S&P 500 dropped about 3.3%. The tech-heavy Nasdaq took the worst of the beating, losing just over 4% on the day.

Wall Street got some positive news Thursday morning, as the latest read of the Consumer Price Index came in cooler than expected. September’s CPI, an important metric of inflation, increased 0.1%, down from its +0.2% move in August. In the trailing 12 months, the CPI added 2.3%, slowing from the 2.7% advance seen in the previous read.

Still, stocks were struggling to generate positive momentum in earlier trading Thursday. Not immune to the selling was McDonald’s MCD, a popular dividend-paying stock which some might think could work as a safe haven during stretches of market uncertainty where the economy remains strong.

Shares of McDonald’s are now down about 3.5% from the six-month highs they reached earlier this week. The burger behemoth has fared slightly better than many other major companies, but recent volatility has put a dent in what looked to be the beginning of a strong rally for MCD.

Still, McDonald’s presents interesting earnings growth opportunities as the corporation continues to adjust its business structure. This is also a company that has likely benefitted from recent tax cuts.

The latest earnings report from McDonald’s is due in less than two weeks. For the soon-to-be reported period, analysts are expecting McDonald’s to report earnings of $1.99 per share, up more than 13% from the prior-year period. The company is also paying a healthy dividend and presents a yield of 2.4% right now.

Elsewhere, Wall Street is gearing up for a swarm of earnings announcers from the big banks, starting tomorrow with a gang of reporters that includes Citigroup C.

Citi has not missed bottom-line estimates since early 2015, and the company looks poised to deliver impressive growth for the soon-to-be-reported period. In fact, our latest Zacks Consensus Estimates suggest Citigroup is expected to post earnings of $1.67 per share, which would mark a surge of 17.6% from the prior-year period.

Moreover, Citigroup has witnessed more positive estimate revisions than negative adjustments heading into the report. The Zacks Consensus mark has added five cents over the duration of the quarter, and sentiment looks bullish ahead of the announcement.

Make sure to check out the above video for Ryan’s in-depth commentary on McDonald’s and Citigroup!

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