The European economic crisis could be coming to an end.
Early Wednesday, economic data out of Europe suggested that the continent’s economy is improving. Meanwhile, the UK is also showing signs of life.
If — at long last — the European economic situation is turning around, some major stocks could be poised to benefit. In particular, shares of McDonald’s Corporation (NYSE:MCD), Mondelez International Inc (NASDAQ:MDLZ), and Ford Motor Company (NYSE:F) could outperform.
Is Europe rebounding?
French manufacturing output hit its highest level since 2011 on Wednesday. At the same time, Germany’s flash PMI report came in better than expected, indicating that German manufacturing is rebounding.
Spain’s GDP continues to shrink, but not as badly as economists had expected. Spain’s GDP declined just 0.1% in the second quarter, far less than the 0.5% drop in the prior quarter.
As for the UK, a report last week showed that retail sales rose 0.2%, suggesting that UK consumers are more willing to spend.
McDonald’s Corporation (NYSE:MCD) has a lot of European exposure
Fast food giant McDonald’s Corporation (NYSE:MCD) is heavily exposed to Europe. In fact, Europe accounts for about 39% of McDonald’s Corporation (NYSE:MCD) revenue, 7% more than the US.
McDonald’s Corporation (NYSE:MCD) shares slumped earlier in the week, after the company turned in a disappointing quarter. Europe was partially to blame, as comparable sales declined 0.1%. Still, McDonald’s Corporation (NYSE:MCD) European performance was better than its performance in Asia — comparable sales declined 0.3% in that region.
McDonald’s CEO Don Thompson wasn’t ready to declare a European recovery just yet. On the company’s earnings call, he said that (based on his observations) the notion of a European economic recovery was premature. Overall, he continued to characterize Europe as a “big challenge.”
But regardless of Thompson’s views, given McDonald’s big European exposure, a European recovery would certainly benefit the fast food giant.
Mondelez International Inc (NASDAQ:MDLZ) gets 39% of its revenue from Europe
Europe is by far Mondelez International Inc (NASDAQ:MDLZ)’s biggest market. It accounts for about 39% of the company’s revenue, nearly twice as much as all of North America.
When the company reported earnings in May, it characterized the European environment as “difficult.” Net revenue dropped 1%, while operating income fell 4.7%. The company blamed the results partially on the price of coffee.
Nevertheless, Europe remains a major market for Mondelez International Inc (NASDAQ:MDLZ), and though its products — as foods — are not subject to significant demand swings, a stronger European economy should benefit the company.