[Stock Advisors] McDonald's & Starbacks - Iconic brands

The markets have been crazy of late so we need to stay defensive. This month I want to recommend two iconic brands.

McDonalds (MCD) and Starbucks (SBUX) both offer the broad global footprints that come with geographic diversification.

In the event that Europe does melt down, both of these companies have opportunities for accelerating growth in China and India. Let's take a quick look at them individually.

McDonalds is the largest fast food franchise in the world with over 33,000 stores and 400,000 employees.

Incredibly, 80% of the properties are still owned and operated by individuals. The company has revenues of over $24 billion, over $5 billion in profits, and they are still growing.
August marked their 100th consecutive month of positive global comparative sales growth and the stock pays a dividend of nearly 3%.

I think the pull-back gives investors a chance to get in at a reasonable price and enjoy a decent yield with consistent growth and a product mix that is perfect for lean economic times.

At 15.4 times forward earnings, the shares don't look expensive and given the uncertainties that surround us peace of mind is worth a great deal. Buy with a target of $98. The shares closed on Friday at $88.29.

The headline story on Starbucks is that since the founder, Howard Schultz, has returned to run the company the business has dramatically improved.

The other headline is that Mr. Schultz recently announced aggressive expansion plans in both China and India, with more than 1,000 new stores in China alone.

Also underway are major expansions in South Korea where they plan to open several hundred locations.

Starbucks has also revived their Seattle's Best brand and partnered with Burger King and Subway w! hich wil l give them access to 30,000 additional locations.

I have also been impressed by the company's reaction to rising coffee prices. Some of their competitors tried to cut prices at just the wrong time, whereas Starbucks maintained their prices and worked on frequent buyer reward programs.

At 21.5 times forward earnings, Starbucks may not seem cheap but the growth that lies in front of them more than justifies the current price. Buy with a target of $46.

People have to eat (and drink). Even in tough times most people will cut back on a lot before they give up their caffeine and parents will still need an inexpensive place to take their kids.

Both these iconic American brands have become truly international and will continue to thrive over the long haul while offering defensive positions during times of market turbulence.

Learn more about this financial newsletter at Gordon Pape's Internet Wealth Builder.