Blog > US Stocks and Markets > Invest in your vices: McDonalds (MCD) and Phillip Morris (PM) surprise
Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

Invest in your vices: McDonalds (MCD) and Phillip Morris (PM) surprise

Today's Financial News - Posted October 22, 2008

Wall Street is not in a good mood today. Earnings season is in high gear and the news is not good. Why are companies like McDonalds (NYSE:MCD) and Phillip Morris (NYSE:PM) celebrating?

By Andrew Snyder

Baltimore – (TFN): We are in the heart of earnings season, and as you can tell by the plunging Dow and dropping oil prices, the reports are not great and the forecasts are even worse. But there are a few bright spots out there.

Notably, McDonalds (NYSE:MCD) beat Wall Street estimate and showed a hefty increase in third-quarter revenues. Analysts were expecting earnings per share of $0.98, but the company showed profits of $1.05 per share. The earnings came on revenues of $1.19 billion, a year-over-year increase of about 11%.

Even with the positive earnings report, shares of McDonalds opened in negative territory. That was not the case for Phillip Morris International (NYSE:PM). It is the international tobacco-selling division that Altria (NYSE:MO) spun off earlier this year.

This morning’s announcement proves my point that so-called “vice” stocks will be winners throughout this market mess. The company’s sales rose by over 17% to help the company record a third-quarter profit of $2.08 billion. This time last year, that figure was just $1.73 billion. Earnings per share (excluding one-time items) were $0.93, four cents higher than estimates.

Like father, like son

This is great news for the company’s former owner, Altria. If you recall, I have recommended buying shares of the company several times over the past two months. In fact, Hot Stock Confidential readers were able to lock in gains of over 85% on the company last week.

As Phillip Morris has proven, its products (Altria still sells tobacco products in the States), remain in high demand and profits are growing as if there were no global slowdown.

Best of all, Altria pays a beautiful 6.3% dividend. With the profit outlook remaining strong, I do not expect to see that shareholder benefit reduced anytime soon.

The markets are teaching us some valuable lessons this week. Stay away from the defense industry. Do your homework before investing in the energy market. And stick with the companies and products that you know and use every day.

Even when the markets are deep in the red, there are plenty of gains to be made out there.


Next Article: Real estate prices: The froth is gone

Related Articles

Posted by Andrew Snyder · Filed Under US Stocks and Markets 

Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

 Add to Technorati Favorites | Follow Us on Twitter!

Be the first to leave a reply.

Your comments are welcome