This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Three ETFs for Fast-Food Fans

Stocks in this article: PBJ PEJ VCR

By Kevin Grewal, Editorial Director at www.SmartStops.net

NEW YORK ( TheStreet) -- As consumers around the world continue to opt for choices that don't break the bank, some fast-food eateries remain attractive and for good reason.

Most recently, the most well-known fast-food franchise in the world, McDonald's (MCD), reported that same-stores sales are on the rise. The retailer stated that sales at restaurants open for at least one year increased 4.8%, marking the largest one-month gain in nearly one year.

Domestically, analysts suggest that the gains may be attributed to McDonald's dollar menu, which recently expanded to include breakfast items, and promotional items boosted by the Olympics. The company is expected to continue to gain share against its competitors.

>>Want More ETFs? Visit Our ETF Screener Page

To further give the Oak Brook, Ill-based fast-food giant a boost, international markets witnessed an exceptional uptick, with the Asia Pacific, Middle East and Africa regions seeing the highest gains of over 10%. Additionally, sales in Europe grew by more than 5%, primarily driven by jumps in France and the United Kingdom.

A second fast-food chain that has been performing well is Yum Brands (YUM). This popular fast-food parent company, which includes Taco Bell, Pizza Hut and KFC, offers cheap food and has a large store base, which makes it easy for consumers to reach. Additionally, YUM has beaten Wall Street's expectations in each of the last four quarters and is trading around 14 times earnings, making it relatively undervalued. Lastly, YUM has the largest fast-food chain presence in China, which is expected to be the fastest-growing consumer market in the coming year.

Domestically, the economy is far from being mended and consumers remain cautions, meaning that cheaper alternatives will continue to reap the benefits. Internationally, the middle class in emerging nations is growing at exponential rates and is being introduced to the Western way of life, which includes eating at restaurants like McDonald's and any of the YUM Brand subsidiaries.

A good way to gain access to both of these fast food giants includes:


  • PowerShares Dynamic Food & Beverage (PBJ), which allocates 4.9% of its assets to MCD and 4.8% to YUM. PBJ closed at $15.18 on Monday.
  • PowerShares Dynamic Leisure & Entertainment (PEJ), 4.7% allocated top MCD and 4.7% to YUM. PEJ closed at $14.80 on Monday.
  • Vanguard Consumer Discretionary ETF (VCR), which boasts MCD as its top holding and allocates nearly 1.3% of its assets to YUM. VCR closed at $50.34 on Monday.

Although an opportunity exists in these equities, it is important to keep in mind the inherent risks involved in investing in equities as well as the impact that an unstable labor market can have on consumer discretionary spending.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs