GE, McDonald's deliver for shareholders

Both stocks have room to run.

By Jonathan Berr Apr 20, 2012 10:33AM

General Electric (GE) and McDonald's (MCD) have bolstered my faith in the economic recovery.

GE on Friday reported better-than-expected first-quarter results as the company's energy business outperformed the finance division for the first time since 2010. Meanwhile, the Golden Arches met Wall Street's lofty expectations, reporting a 7.3% rise in sales at stores open at least 13 months as the public gobbled up menu items such as the new Chicken McBites.

Shares of General Electric, which have gained about 7% this year, and of McDonald's, which have slipped more than 5%, were up in early trading. There were positives in both earnings reports for investors to like.

Both shares are worth adding to most portfolios. Wall Street expects GE shares to hit $22.29 during the next 52 weeks, about 16% higher from where it recently traded. Analysts expect McDonald's shares to hit $106.92, about 10% above where it currently trades, during the same time.

Earnings from continuing operations at GE rose 1% to $3.59 billion, or 34 cents a share, versus to $3.56 billion, or 33 cents a year earlier. Revenue fell 8% to $35.2 billion in part because of the sale of NBCUniversal. Wall Street expected earnings of 33 cents on revenue of $34.7 billion, according to Bloomberg.

Among the highlights were the 20% rise in infrastructure orders to $23.1 billion, a record high, and the improvements at GE Capital, which gained 27% in the first quarter excluding the Garanti sale impact.

McDonald's reported that net income rose 4.8% to $1.27 billion, or $1.23 a share. Revenue increased 7.1% to $6.55 billion, fueled by gains around the world. Wall Street expected the fast-food chain to earn $1.23 per share on revenue of $6.54 billion, according to Bloomberg News.

Investors seem confident that Don Thompson will continue in the footsteps on Jim Skinner when he retires as the CEO in July. McDonald's plans to spend about $1.45 billion to remodel about 2,400 stores this year.

General Electric's performance underscores the fact that businesses are feeling confident about the future. McDonald's results prove that consumers are willing to buy premium products such as coffee drinks.

The economy still isn't firing on all cylinders. But many people believe the tide is turning, and GE and McDonald's are benefiting from the rising optimism.

Jonathan Berr is long McDonald's.

Apr 20, 2012 3:02PM
Apr 20, 2012 2:45PM
gotta love them Big Mac's!  (Or is it a #1 super-sized)?
Apr 20, 2012 3:32PM
A revamped "green" McD's is the busiest eaterie in my southern California hometown of over 310,000 by far.  Chinese made solar panels over the often packed parking lot complete the picture. 
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.