Better Buy: Shake Shack Inc. vs. McDonald's

If you were told two years ago to choose whether McDonald's (NYSE: MCD) or Shake Shack (NYSE: SHAK) would be hitting new all-time highs two summers later, you probably wouldn't bet on the Golden Arches being the victor. McDonald's was mired in a nearly two-year funk of negative domestic comps, and Shake Shack had gone public earlier that year as a market darling.

Reality is a shocker. Shake Shack is now trading pocket change away from an all-time low, and McDonald's is still basking near the all-time highs it set earlier this summer. Is McDonald's the new burger darling? Can Shake Shack bounce back? More importantly, which burger flipper is the better investment now that McDonald's has popped as Shake Shack's valuation gets pared back? The questions are important. Let's see if we can figure things out.

It's clear that momentum is working for just one of the two chains these days. McDonald's is about to wrap up its 10th consecutive month of stock gains, and it's doing so by posting positive comps and healthy earnings growth. Revenue has been declining, but only because the chain's in the process of handing thousands of its company-owned locations to franchisees.

Source: Fool.com