Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Uncovering the Next McDonald's |
Published:
February 11, 2008
It's
hard to believe that a $22 billion global empire could start
with a simple milkshake machine. But that's exactly what
happened in 1954 when a 52-year-old traveling salesman stopped
at a California hamburger chain.
This salesman had just taken the gamble of his life, mortgaging
his home to become the exclusive distributor of the Mixmaster
milkshake machine. He heard that one of the best customers for
this machine was a small hamburger stand in San Bernardino,
California that owned eight of the machines. The salesman felt
that there might be an opportunity to expand his business with
this stand.
But this trip turned into a lot more than sales of Mixmasters.
It was during this visit that the Mixmaster salesman, Ray Kroc,
came up with the basic idea for the McDonald's (NYSE: MCD)
restaurant chain.
Kroc saw how quickly and efficiently customers were served at
Dick and Mac McDonald's chain, suggesting they open up several
additional locations to capitalize on their profitable business
model. Kroc believed that additional locations would also
benefit him -- he could sell each restaurant as many as eight
new Mixmasters, just like the original stand.
The rest is history. Kroc volunteered to open and run McDonald's
first new location in Des Plaines, Illinois. The franchised
restaurant opened the year after Kroc's first visit -- Kroc ran
the restaurant and paid royalties for the use of the McDonald's
name.
Within ten years, Kroc controlled McDonald's and the chain had
opened dozens of locations -- it was the world's first fast-food
chain.
McDonald's stock was listed in 1965. Investors who bought
100 shares back then worth less than $2,300 are now sitting on
an investment worth more than $3.3 million. Meanwhile,
McDonald's has expanded from that single California location to
more than 31,000 restaurants in 118 countries.
McDonald's is now a mature company and its growth potential
isn't what it used to be. The U.S. market is already saturated
with McDonald's locations -- there are limited opportunities to
open new restaurants without poaching sales from existing
locations.
But there are a host of other restaurants out there employing
the same basic model McDonald's followed to grow. Specifically,
if a chain can identify a popular concept or niche such as a
particular food style or atmosphere, that chain has the
opportunity to expand rapidly into new markets, just as
McDonald's has over the past 50 years.
Some of the best restaurant chains are also finding they do not
need to limit their business to the U.S. market -- rapid growth
in restaurant spending abroad offers an opportunity to expand
overseas. In China, for example, analysts estimate that spending
on dining out is rising at an annualized pace of more than +13%;
the average Chinese consumer now dines out three times per week.
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And restaurant chains also benefit
from some additional tailwinds -- rapid growth in spending on
food away from home. According to the U.S. Bureau of Labor
Statistics, the average American spends a little under 11% of
his/her total annual after-tax income on food. In |
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recent years, the amount of cash
spent on dining out has been increasing at a faster
pace than total food expenditures. Our chart shows
spending by the average consumer on food away from
home going back to 1984.
Consumer spending on food has more than doubled from $1,320 in
1984 to nearly $2,700 today. Spending has accelerated at a
particularly rapid pace since the mid-1990s. In fact, growth has
accelerated from an annualized pace of about +2.6% from 1984
through 1994 to about +3.9% annualized since then.
Even better, the restaurant business is relatively defensive
during economic downturns because dining out is one of the last
areas of expenditure consumers cut back on. Consider that during
the last U.S. economic slowdown from 2001-2003, consumer
spending on food away from home only dropped for one year and
quickly hit a new all-time high in 2004.
In the table below, my staff and I list of some of
the most promising restaurant chains publicly traded
in the U.S. and offer in-depth analysis of two
companies we think could be the next McDonald's.
Important Note: In the
remainder of this article,
StreetAuthority
Market Advisor
editor Paul Tracy provides a list of over 30 of the top-performing
restaurant chains on the market, but he
whittles it down to just two of the most promising. In his
extensive profiles of both, he states all the reasons why you should own
these amazing growth plays, each with long-term earnings growth of at
least +19%. However, in order to view the
remainder of this article, you'll need to subscribe to our
premium investing newsletter --
Market Advisor. After you
subscribe, you'll receive immediate access to this full article,
as well as our monthly
Market Advisor newsletter and a
host of additional premium content. Please visit one of the
following links to continue. . .
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
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receive in-depth guidance on today's leading investing
opportunities each month, plus access to five model
portfolios, please subscribe to Paul Tracy's premium investment
newsletter -- the StreetAuthority
Market Advisor. |
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Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
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