The Best Blue Chip Stock to Buy After This Year's Market Pullback

McDonald's (NYSE: MCD) has long been a member of the Dow Jones Industrial Average. The U.S.'s largest fast food restaurant chain serves as a bellwether for consumer sentiment and the state of the economy.

In the first quarter of 2026, consumer sentiment was not good, and that did not help McDonald's stock at all. But things really fell apart in March after the war in Iran began.

McDonald's shares are down roughly 9% year to date. But since the war in Iran started, shares have tanked 18%, going from $341 per share on Feb. 27 to the current $278 per share.

When McDonald's released Q1 2026 earnings on May 7, the results for this blue chip stock were solid. Revenue jumped 9% to $6.5 billion, while comparable sales, tracking the year-over-year performance of existing restaurants, rose 3.8% from the same quarter a year ago. Systemwide sales, the amount spent by customers at all of its restaurants worldwide, rose 11% year over year to $34 billion.

Image source: Getty Images.

Net income rose 6%, and earnings increased 7% to $2.78 per share -- beating estimates.

The March swoon had largely to do with sentiment related to inflation and economic uncertainty. There was also a fair bit of insider selling in March, with executives likely taking profits after shares surged to over $340 per share in February.

McDonald's is at a 52-week low

Some of those concerns were valid as McDonald's saw its U.S.-store margins compress to "not acceptable" levels in Q1, CFO Ian Borden said on the Q1 earnings call. This was due to rising costs while the company was trying to keep prices down. Borden said the company will look to improve performance and optimize the franchisee-versus-company ownership balance.

CEO Christopher Kempczinski noted that the macroenvironment was not improving and may get worse in the near term. He added that April comps are low and that McDonald's expects "meaningful deceleration" in comparable sales in the second quarter.

On the plus side, the company is focused on making food more affordable, with new McValue and Meal Deal menu items to improve traffic. This past week, analysts at Jefferies added McDonald's to its Franchise Picks list for its new value offerings, among other reasons.

With its value menu and other factors, Stifel analyst Chris O'Cull said that McDonald's stock is poised for a near-term bounce.

"Following the recent pullback, the stock appears oversold, potentially offering a short-term trade for tactical investors ahead of easier U.S. comparisons in May/June and the September Investor Day in Chicago," O'Cull wrote.

McDonald's stock is trading near a 52-week low right now, and its valuation is as low as it's been in more than a year, trading at 21 times forward earnings. While Q2 could be challenging, the recent pullback may have already anticipated that.

Analysts are mostly bullish on McDonald's stock, with nearly 60% calling it a buy and a median price target of $330. That would suggest 18% upside for the stock. Things could remain choppy in the near term, but the long-term fundamentals that have made it a blue chip stock remain intact.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.