MUSCULAR MICKEY D

MUSCULAR MICKEY D

Recession or no, consumers still hunger for premium price products--if they're cheap enough. Thanks to its new McCafe coffees, McDonald's reported on Aug. 10 that its U.S. same-store sales climbed 2.6% in July. The chain's espresso-based drinks cost 60% to 80% more than its regular brew, but 20% to 25% less than Starbucks drinks. Global growth at McDonald's was even better, up 4.3%, with Europe up 7.2%. So why, given its recent run of mouthwatering sales numbers, has Mickey D stock soured from $64 to $56 this year, one of the worst performers in the Dow? Largely because it was seen as a defensive stock--it actually rose in 2008--and lately the big money has been flowing toward cyclicals and financials.