This Day On The Street
Continue to site right-arrow
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!

3 Blue Chips Trailing the Bull Market Stampede

Stocks in this article: BHP CHL MCD

NEW YORK (TheStreet) -- There's no law that says a bull market in stocks can only last five years. But "efficient market" theory does state that eventually all equities will be fairly and fully valued based on the information available. That should result in blue chips with compelling features such as BHP Billiton (BHP), China Mobile (CHL) and McDonald's (MCD) rising again to reward the patient long term investor.

Over the 12 months, the Standard and Poor's 500 index is up more than 23%.

But not all stocks have been lifted by the rising S&P. BHP Billiton, the world's largest natural resources company, has fallen more than 12% over that period. China Mobile, the world's largest cell phone company, is down by more than 15%. McDonald's, the world's largest fast food restaurant, is off by 3.7%.

While trailing the S&P 500 in stock price performance, BHP Billiton, China Mobile and McDonald's top it in many other critical areas for investors.

According to his biographer Carol Loomis, legendary investor Warren Buffett favors companies with a return-on-equity of over 20%. McDonald's has a return-on-equity of more than 36%. For China Mobile, it also exceeds 36%. The return-on-equity for BHP Billiton is just over 35%.

These companies are also more profitable than the average member of the S&P 500, which has a profit margin of 9.2%.

For China Mobile, the profit margin is nearly five times more at 43.3%. BHP Billiton's profit margin is almost four times greater at 36.4%. Like the golden arches outside one of its signature restaurants, the profit margin for McDonald's soars above the S&P 500 mean at 19.9%.

Not only do these companies make more money, they share more of it with the shareholders.

The average dividend yield for a member of the S&P 500 is under 2%. China Mobile pays out more than twice that, at 4.29%. BHP Billiton has a dividend yield of 3.51%. For McDonald's, the dividend yield is 3.40%.

If a bull market does not lift the stock price for BHP Billiton, China Mobile and McDonald's, what will?

Easy: Growth in Asia, especially China. China is the biggest customer for China Mobile and BPH Billiton. Sales for McDonald's are down in the USA, but up in Asia Pacific. As with so many other firms, growth in China will increase the share prices for BHP Billiton, China Mobile and McDonald's.

After the weak export numbers just reported by the General Administration of Customs for the People's Republic, growth might seem unlikely.

But long term, the outlook for China is very bullish. China saves more, earns more by exporting, has the largest foreign currency reserves and boasts the most purchasing power of any country in the world. Urbanization will increase economic growth in China, too.

Looking to the future (which is, after all, what investing is about), China has tremendous potential. That should reward investors in BHP Billiton, China Mobile and McDonald's with robust total returns for the long term.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Select the service that is right for you!

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!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • 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