Mad Cow Scare Helps Companies With Animal Homing Devices

Indeed, the cost of beef is plunging, with cattle futures contracts on the Chicago Mercantile Exchange dropping by the maximum amount in every session since the discovery of the outbreak on Dec. 23. On Monday, live-cattle futures for February 2004 continued to trade under emergency rules, falling by 5 cents, the maximum allowed under the trading curbs, to 81.175 cents per pound.

In addition to lower costs, J.P. Morgan said that McDonald's shares are attractive when compared with those of its rivals.

"Beyond mad cow, McDonald's has underperformed its key industry comparables since June 30, up 9.2%, vs. up 31.1% and up 13.8%, for Wendy's (WEN Quote) and Yum Brands (YUM Quote), respectively, and up 12.5% for the S&P 500," said Ivankoe. "[We] encourage investors to build positions given the stock's recent pullback." (J.P. Morgan does and seeks to do business with the companies it covers in research notes.)

Both Wendy's and McDonald's said that December sales were not affected by the outbreak and fast-food stocks rallied, led higher by Wendy's, which rose 49 cents, or 1.3%, to $38.48. McDonald's, which was up 10 cents, or 0.4%, to $24.19, while Yum gained 21 cents, or 0.6%, to $33.85.