There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

December 24, 2011 - McDonald's Corporation (MCD-NYSE), together with its subsidiaries, operates as a foodservice retailer worldwide. It franchises and operates McDonald's restaurants that offer various food items, soft drinks, coffee, desserts, snacks, and other beverages, as well as full or limited breakfast menu.

Latest News:

McDonald's shares have climbed around 30% this year from $72 at the start of the year to the current market price of $99.

The company announced its global comparable sales, which were higher than expected sending the shares higher. Repeating this growth will be difficult as McDonald's pushes further ahead in emerging markets that are grappling with inflationary pressures that could weigh on both profit margins and sales for the golden arches.

McDonald's currently competes with Yum! Brands, Subway, Starbuck's, Wendy's, among many others.

Global Comparable Sales

Global comparable sales for the month of November were up 7.4% while same-store sales increased by 6.5% in both the U.S. and Europe whereas Asia/Pacific, Middle East and Asia division witnessed 8.1% growth. The markets were expecting growth of around of 4.8-5%.

Profitability Might be Affected

McDonald's has hiked the prices in several regions this year. In China, McDonald's has hiked the prices due to rising commodity prices and labor wages. In fact, China has increased the minimum wages by 15% this year. A substantial part of McDonald's China revenues come from the home delivery model. Rising crude prices and labor wages can also negatively impact the margins. Similarly, the company has raised the prices multiple times in the U.S. and Europe.

Emerging economies, which are more sensitive to price hikes will contribute a greater proportion of revenues in the coming years and so expect margins to drift lower over time. While growth rates have been impressive, the ability to sustain this growth will be a bigger challenge especially as McDonald's increasingly battles with inflation pressures in emerging markets. (From Forbes: http://www.forbes.com/sites/greatspeculations/2011/12/23/mickey-dees-returns-30-in-2011-tougher-time-for-golden-arches-next-year/?partner=yahootix)

Expectations:
For fourth quarter 2011: $1.29 compared to $1.16 last year.
For full year 2011: $5.23 vs $4.61 in 2010
For fully year 2012: $5.73 (consensus from 28 analysts)

Important Numbers:
- Trailing P/E: 19.59
- Forward P/E: 17.43
- Price to sales ratio: 3.82
- Price to book: 7.56
- Operating margin: 30.49%
- Profit margin: 20.34%
- Return on equity: 39.8%
- Return on assets: 15.86%
- Revenues for last 12 months: $26.4 billion
- Total cash: $2.4 billion
- Cash per share: $2.35
- Total debt: $12.54 billion
- Total debt/equity: 94%
- Current ratio: .87
- Book value per share: $13.04
- Beta: .36
- 52- week change: 29.01%
- Shares Outstanding: 1.02 billion
- Float: 1.02 billion
- Held by insiders: .07%
- Held by institutions: 71.2%
- Annual dividend: $2.80
- Yield: 2.8%
- Payout ratio: 48%

Company Web site: www.mcdonalds.com

-  Ted Allrich