A Strong Stock Stuck in the Spiral

Alyce Lomax, The Motley Fool
Updated

Many strong stocks have taken a hit alongside the broader market today. Count McDonald's (NYS: MCD) among that unlucky group, even if its stock price looks relatively unscathed in the current turmoil.

Amid financial panic everywhere, McDonald's reported strong July same-store sales. Its global comps increased 5.1%, bolstered by strong customer traffic in China. U.S. comps increased 4.4%, European comps jumped 5.3%, and Asia, Africa and Middle Eastern comps increased 4%.

In just a few hours' time, McDonald's shares have relinquished nearly 3% as the market chokes. Are investors even registering the Golden Arches' strong July? Hysteria is so prevalent that hardly anybody cares much well a strong company like McDonald's is actually doing.

Meanwhile, other restaurant stocks have fared much worse in the market's bloodbath. In intraday trading today, I ran across several other restaurant stocks that were getting absolutely taken to the woodshed: Ruth's Hospitality (NAS: RUTH) fell about 10%, Wendy's (NYS: WEN) dropped nearly 8%, and Ruby Tuesday (NYS: RT) dropped about 11%. Those major drops don't mean they're better bargain bets than McDonald's; in reality, they're far riskier stocks.

The market's current pessimism gives calm, steady, long-term investors excellent opportunities to pick up shares in strong companies that have taken a temporary bludgeoning. McDonald's relatively minor share-price beatdown presents a far safer investment than many of its bloodier peers.



At the time thisarticle was published Alyce Lomaxdoes not own shares of any of the companies mentioned. Motley Fool newsletter serviceshave recommended buying shares of McDonald's. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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