McDonald’s Corp. $62 – New York symbol MCD

MCDONALD’S CORP. $62 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.1 billion; Market cap: $68.2 billion; WSSF Rating: Above average) provides an example: The stock fell over 23%, from around $64 in mid-December 2007 to $49 in January 2008, on fears that high gasoline prices and lower consumer confidence in the wake of the housing market slowdown would limit customer spending. However, we felt the company’s Dollar Menu would continue to attract cost-conscious consumers. Also, McDonald’s operates over 31,000 fast food restaurants in 120 countries. Rising sales in overseas markets would also offset weaker domestic sales, and shield it from a weaker U.S. dollar. As well, new menu items such as premium coffee and healthier foods would continue to spur repeat visits. Since the drop, the stock has rebounded strongly, and recently hit a new all-time peak of $67. Despite the rise, it still trades at a reasonable 17.7 times the $3.51 a share that McDonald’s will probably earn in 2008. McDonald’s is a buy.