NEW YORK (
) -- Despite a roller coaster ride in the stock market and uncertainty over the overall strength of the global economic recovery, some fast-food stocks and exchange-traded funds that hold them remain attractive.
First off, as long as the unemployment rate remains north of 9% and employers remain cautious about hiring, consumers will continue to seek discount alternatives. When it comes to eating, fast-food joints will likely be the benefactors of this trend.
One such fast-food chain positioned to reap the benefits of consumer's penny pinching is
(MCD - Get Report)
. The Oak Brook, Ill.-based company's emphasis on value contributed to the burger chain reporting double-digit percentage growth in first-quarter revenue and earnings, highlighted by robust sales returning to the U.S. In the U.S., earnings rose 11% and revenue increased 10%. Similar trends were seen internationally, as McDonald's global same-store sales rose 4.2%, with the Asia/Pacific, Middle East and Africa segment gaining 5.7% and Europe increasing by 5.2%.
To further highlight McDonald's attractiveness, a benign commodity environment will help keep costs low and mitigate any needs for near-term future price hikes of goods offered. Additionally, McDonald's utilizes various purchasing mechanisms to keep costs down and predictable, giving them a competitive advantage over competitors. Lastly, from a technical standpoint, McDonald's has outperformed the
by nearly 10% and is trading well above its 200-day moving average.
As for the future, the company will likely continue to outperform as it continues to focus on its dollar menu items and plans to expand its higher-end price items by adding frappes and smoothies to its already successful Angus burgers and premium chicken sandwiches.
Another notable mention is the world's largest fast food operator,
(YUM - Get Report)
, which owns and operates Taco Bell, Pizza Hut, KFC, A&W Root Beer and Long John Silver's. Overall, Yum boasts more than 37,000 outlets and operates in nearly 110 different countries. In the first quarter of 2010, Yum witnessed an 11% increase in revenues and strong growth internationally. In China, the company grew by 23% and continued expanding its presence in the fastest-growing consumer market around the globe. From a technical perspective, Yum is relatively cheap trading around 14.7 times earnings and is well above its 200-day moving average, both enhancing its attractiveness.