Strong Brands Fuel Growth & Cut Risk

Article Excerpt

Fast-food stocks have been among our biggest gainers since the 2002 stock market slump. Despite increasing concerns over nutritional content, Americans are eating more of their meals outside of the home. Fast-food is also an increasingly affordable luxury in developing countries. However, rising gas prices could cut customer traffic and put a damper on profit growth. Rising food and labor costs will also squeeze margins. We designed our system to zero in on fast-food companies whose strong brands and market share will help them overcome these setbacks. Here are three top examples. MCDONALD’S CORP. $51 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.2 billion; Market cap; $61.2 billion; WSSF Rating: Above average) operates over 31,000 fast-food restaurants in 120 countries. Overseas operations account for two-thirds of its sales, and 40% of profits. The company owns about 25% of its restaurants, but aims to convert them into franchises over the next few years. Consequently, it recently sold 1,600 of its outlets…