McDonald's Earnings

McDonald's (MCD), one of my portfolio holdings, was smacked today losing 6% today. The stock has been sliding since news came out two weeks ago that the company would post weak same store sales. It was the first non-growth sales report in 56 months.

Well, I think that Jim Skinner said it best, "We're recession-resistant, not recession-proof."

But some good news. Only 35% of McDonald's earnings are U.S. based. It was 58% in 1991. If the rest of the world can keep trucking along, which they all publicly say (but their markets say something totally different), then MCD should be just fine.

The stock is off it's 52 week high and is a solid stock to hold and hold for a long, long time. If my portfolio allowed for adding to a position, this would be a good time for me to do it and let it sit.

I do not see this one month flat sales or even a couple of slow months at the Golden Arches as a red flag of a sinking ship. Other fast food companies are struggling, including Wendy's. This is a strong company that has stated they are not going to get into a pricing war for burgers. They had innovated and changed their product offerings and that is why we have seen fantastic sales numbers over the last few years.

The company has also stated that they are going to start paying dividends on a quarterly basis.

There is just too much good in this company to turn away. The long term potential of this stock far outweighs any short term pressures the stock may face.

Adding 3 new Picks

I cut LVS loose earlier this week and the question was how to replace it? My first idea is to go with domestic companies that have a global reach...and make a large portion of their income from that "reach". Why this type of business? First, if we really are going to face a slowdown here at home, having a large portion of your income coming from outside the United States is great. Second, I don't think we are going to see the huge slowdown that most analysts are expecting, outside a few well worn sectors.

First choice: McDonald's (MCD). Now here is a comeback story. McDonald's went from a cheesy burger joint for kids to totally changing their product line and presenting their stores in a much more adult friendly kind of way. And it work. The stock has been on a great run over the last year or so. Don't expect it to slow down any time soon.

Second choice: Coca Cola Company (KO). Jim Cramer likes this company if the economy tanks. Great. I agree with Cramer on something. Now I don't feel so great about this pick. And I already hold PepsiCo also. I don't care. This company reaches around the globe and millions upon billions of the growing middle classes around the world will have to have their "Coke fix". Coca Cola has been buying up all sorts of little companies to diversify it's product offerings. It will work and continue to work.

Now for my third pick I am going away from the above reason and go back in the pharmaceutical area with my choice of Gilead Sciences Inc (GILD). This stock has grown and grown where most companies have big ups and downs. The company has a few hypertension drugs in the pipeline that are in Phase III trials, but the preliminary reports are looking good.

Here are the newbies. What do you think?