McDonald's (MCD)

McDonald&#39;s (<a href=http://www.zacks.com/stock/quote/mcd>MCD</a>) continues to report strong same-store sales, driven by the consumer trade down from casual dining, and menu variety. Global comps rose 4.3% in 1Q09 (U.S. +4.7%, Europe +3.2%, APMEA +5.5%). <p> Although comps are getting tougher and the U.S. dollar has strengthened, we think further growth is possible through menu innovations, margin improvement in APMEA, where company-operated restaurant margins lag the US by 260 basis points, G&A leverage, and share repurchases. We expect continued headwinds from a stronger dollar, but those impact translation only, not the fundamentals of overseas operations, which operate entirely in local currency. <p><i> With a strong balance sheet, consistent earnings, healthy cash flow, high ROE (30%) and a generous dividend, we think this stock provides relative safety and moderate growth in a turbulent environment and exposure to faster-growing international markets.</i>

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