McDonald's (MCD): The international fast-food restaurant giant sports a low beta of only 0.40. The venerable restaurant chain has tranformed itself into an international powerhouse over the last two decades. Once a poster-child for unhealthy, fast-food fare, at least one runner has plans to eat MCD food for the 30 days leading up to a marathon. McDonald’s has a profit margin of 20.55%, and its operating margin is currently 30.34%. The company has a trailing P/E of 16.55 and a forward P/E of 13.78. This is a safe blue chip to consider today. As a low cost-basis food provider, patrons of MCD will return for a long time. Berkshire Hathaway (BRK.B, BRK.A): Berkshire shares are cheap in their own right and should trade around the $145,000 mark ($96 per B share), based on Berkshire's historic book value median of 1.6x. Most analysts continue to model Berkshire primarily as an insurance company, which is meritable, given that we value Berkshire's insurance businesses at around $85,000 per A share. However, the Burlington (BNI) acquisition has transformed Berkshire's earnings power to suggest a book value analysis consistent with that of a railroad for its representative part of earnings. Warren Buffett also takes his position as a financial steward, not only for shareholders but also all Americans, very seriously. In the 2009 Annual report from last spring, Buffett wrote: We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback position at Berkshire. Instead, we will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses. When the financial system went into cardiac arrest in September 2008, Berkshire was a supplier of liquidity and capital to the system, not a supplicant. At the very peak of the crisis, we poured $15.5 billion into a business world that could otherwise look only to the federal government for help. Of that, $9 billion went to bolster capital at three highly-regarded and previously-secure American businesses that needed – without delay – our tangible vote of confidence.
We took a look at diversified equities that balance global, commodities, and currencies risks. Here are three names that passed the test.
Altria Group (MO): As we wrote about here, Altria Group sports a beta of only 0.47, insulating it considerably from market swings. The Virginia-based company manufactures and sells cigarettes, wine and tobacco products in the U.S. and internationally through its subsidiaries, including Philip Morris. Altria Group reports a profit margin of 23.12% and an operating margin of 39.31%. The trailing P/E and forward P/E are 13.79 and 11.79, respectively. Counted among the longest-term holdings of current Fed chairman Ben Bernanke, before he took his current post, Altria's products are the last to be cut from consumer spending.
