Apple is trading at an almost laughably low trailing P/E historically, currently 10.55 (almost 7 if you back out cash), and with a yield of 2.70% the stock should be as attractive as its products. At a PEG of .53 it’s undervalued, and with no debt it’s a steal. The stock is down 24.55% over the last year and didn’t run up before the usual blockbuster catalyst of the Apple Developer Conference starting June 10. At the All Things D conference CEO Tim Cook intimated some exciting new product categories were under development.
Coca-Cola, the global beverage titan, offers a 2.80% yield and a forward P/E of 17.70. Coca-Cola may be overvalued with a 2+ PEG, although it is only up 10.3% over the last year, underperforming many consumer staple defensives. Its operating margin is 23.35% but earnings growth remains mired in the middle to high single digits and is expected around 6% for the next five years. Rival PepsiCo, Inc. (NYSE:PEP) is up almost twice as much over the last year, and its trailing P/E and yield are almost identical to Coca-Cola.
McDonald’s Corporation (NYSE:MCD) has the highest yield at 3.20% and a trailing P/E of 18.14. It has been challenged over the past year with same store sales decreases globally. Still, the operating margin of 30.13% is healthy. The stock is up 13.50% this last year.
McDonald’s Corporation (NYSE:MCD) is seeing more challenges to its moat as the global fast food leader with privately held-Subway building more stores in the US and Dunkin’ Donuts beginning to offer fast food type sandwiches and expanding their breakfast offerings.
In the eye of the beholder
MillwardBrown, which chooses the ZBrands100 most Valuable Brands for eight years, has seen the value of their Global Brands portfolio grow by 58%, 7% just this year. The power of brand is so important among a cacophony of products available, and these companies understand the challenges of both function and form.
As three of the most recognizable brands on the planet with the most successful packaging and advertising supporting products people love the world over, these three brands are still buys on any dip.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Apple, Coca-Cola, and McDonald’s. The Motley Fool owns shares of Apple and McDonald’s. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Monetizing Beauty: How the Masters Do It originally appeared on Fool.com is written by AnnaLisa Kraft.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
