by Hilary Kramer | September 4, 2012 4:43 pm
As investors return to the market from summer hiatus, I’m eyeing a few stocks that are great opportunities this fall. You might have already seen my discussion on back-to-school stocks in MarketWatch, where I explained why Estee Lauder (NYSE:EL), Dick’s Sporting Goods (NYSE:DKS), and Unilever (NYSE:UN) are great additions to your portfolio.
You can read my full discussion of these stocks on MarketWatch, but now I’d also like to throw one new stock your way that you won’t find in today’s article, as it is exclusively for my Kramer Capital Research readers. Let’s get started.
Sometimes your best bet for a good investment lies in the familiar. And what could be more familiar than McDonald’s (NYSE:MCD), the world’s largest fast food burger chain. Whether or not you eat McNuggets or Big Macs, there is a lot to like about this company, which is just as much a cultural phenomenon as it is a meal choice.
Beginning in 1954 with a small burger restaurant in California, McDonald’s has since grown to become a global fast food powerhouse that revolutionized the way people eat. McDonald’s serves more than 68 million people in over 119 countries, through more than 33,000 restaurants each day.
Being a global company, MCD is not immune from the “European cold,” and the impact of a stronger dollar, which lessens the value of overseas sales for U.S. companies. However, despite this global belt tightening, McDonald’s remains a great buy due to its ability to merchandise products in diverse markets through tough times.
Let’s look at its financials first. In the second quarter 2012, McDonald’s posted a rare earnings miss, its first in nearly four years. And while the underwhelming data had some analysts calling for the end, MCD still posted an increase in total revenues, at $6.92 billion from $6.91 billion a year earlier.
Overall sales at established restaurants also rose 3.7% in the second quarter, exceeding some analysts’ 2.9% forecast. And, the company actually beat sales expectations for Europe, in part due to its ramp up in advertising spending. On top of that, shares of MCD hit all-time highs of over $100 earlier this year, as the stock outperformed rivals.
Now, as global headwinds persist, McDonald’s is doing what it does best: appealing to a diverse customer base through a consistent selection of low-priced menu options. Cash-strapped consumers are loyal to McDonald’s for its Dollar Menu, and around the globe, MCD has tapped into key markets for its ability to tailor its global menu to each country’s cultural tastes and preferences.
Visit Spain and you can order Gazpacho, try the Spinach and Parmesan cheese nuggets in Italy or the vegemite English muffin in Australia. And now in India, MCD has announced big plans to open its first vegetarian-only restaurant next year. MCD already caters to India’s Hindu and Muslim population by serving chicken options in place of beef and pork, and this latest move represents the company’s commitment to serving local populations and innovating its brand despite tough times. And India is a great market to do this, as its 1.22 billion people comprise more vegetarians than the rest of the world combined.
The bottom line is that McDonald’s is the type of company that investors have come to expect a lot of, due to its track record of solid outperformance. And despite the global economic headwinds, I believe that MCD has all the makings of a $100 stock and will continue to perform as we head into the fall, and beyond.
As I mentioned above, I also like EL, DKS, and UN for their growth potential moving forward, and you can read my discussion each company in my article on MarketWatch, here.
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