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Tickers in this Article: MCD, KO, BKC
It was a strange day for news on the Dow, but one "golden" company managed to shine through. McDonald's (NYSE:MCD), and its golden arches, reported a 24% rise in profit on strong international sales. The profit numbers easily topped expectations, but due to the heavy hit the Dow took (dropped 105 points to close at $12,720 on Tuesday), this tasty stock still ended the day down. So, should investors still be "lovin' it", or will McDonald's lose its golden luster? I think this offers investors a great buy-in opportunity.

Global Growth

McDonald's reported first quarter net income of $946.1 million (81 cents per share) compared with $762.4 million (62 cents per share) from a year before. The results handily beat analyst expectations of 70 cents per share in earnings. Revenues for the fast food company saw a 6% increase to $5.6 billion from $5.3 billion a year earlier. The company was able to contain costs, which helped operating income increase 24%. (To read more about restaurant stocks, see Sinking Your Teeth Into Restaurant Stocks.)

The main driver for the growth was strong international sales. The company was helped by the falling dollar, and the numbers were still very impressive for this mature company. Excluding the benefits of currency translation both operating and net profits rose 16%. Global comparable sales grew 7.4% for the quarter, and the company cited in its press release that it now serves 2.5 million more customers per day compared with a year earlier. It is unbelievable to think that a company that has been in business as long as McDonald's can add that many more customers.

Value Menu
Despite all of this fantastic news from the company, the market focused in on a 0.8% decrease in same store sales for the months of March slightly affecting the price negatively. The March sales number is important and should be considered, but all of the above numbers outweigh this one in my opinion. Those numbers report a strong global brand that is experiencing a small dip in price.

Some people shy away from stocks like this, because they feel it is harder to make money with a mature stock. Tell that to value investing guru Warren Buffett, who loves to buy strong global brands and has been hugely successful with this view. One of his best investments has been Coca Cola (NYSE:KO), and he bought the stock already after it had a stronghold on the soft drink industry. Based on forward earnings estimates McDonald's is trading at a lower price to earnings multiple than Coca Cola. I believe both are strong brands, and great companies.

McDonald's is very interesting at this level, because even with the great growth it has shown, the stock has kept a constant price from a year ago - offering a great time to buy in before it jumps. It trades at a premium to competitor Burger King (NYSE:BKC), which is well-deserved because McDonald's has a better global brand, and has better profit margins. McDonald's has been experiencing great growth, and its increased international sales could be a great hedge against a slowing U.S. economy. All in all, I think the story is great for McDonald's and it is a stock to consider.

The Bottom Line
McDonald's reported a great start to 2008, but the stock was held down as investors focused on the decline in March same store sales. The story is great for the stock, and the market's reaction just allows investors to purchase the stock without paying for the earnings bounce. McDonald's has a great global brand, and should continue to see strong growth. Value investors should get on board while the market misjudges its price.

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