Ring in the new year with more stocks for 2008.

As 2007 draws to a close, one word looms in many economists' minds: recession. There's no guarantee that the U.S. will slip into a full-blown no-growth period, but the prospect has nonetheless unsettled many observers. So why am I bullish on a stock whose earnings relate directly to consumer spending? Well, even environments like this can offer good investment opportunities -- provided you know where to look.

Hamburger restaurateur and real-estate conglomerate McDonald's (NYSE:MCD) has been firing on all cylinders, and there's still more to come. A new coffee initiative, reasonably priced food, growth abroad, and strong management will pave the way for a golden 2008.

Coffee, anyone?
In the next five years, the coffee market is expected to generate sales of $18.8 billion -- with a profit margin around 95% per cup! No wonder coffee giant Starbucks (NASDAQ:SBUX) is so incredibly profitable.

Given the coffee market's vastness, Fools shouldn't be surprised that McDonald's is building a new initiative focused primarily on serving inexpensive, high-quality java. The fast-food giant is installing new "coffee stations" in each restaurant, and it's even paying for 40% of the related installation costs. When multiplied by 13,800 U.S. stores, that's a hefty chunk of change. Most companies wouldn't commit this much money if they weren't expecting a healthy return on investment.

McCheap prices
While coffee might not necessarily be McDonald's wheelhouse, cheap-but-tasty food certainly is. In an uncertain economy, we know that consumer spending is usually the first thing to go. But while this trend might affect higher-cost sit-down chains like Famous Dave's (NASDAQ:DAVE) or P.F. Chang's (NASDAQ:PFCB), I believe recessionary fears will actually drive more customers toward Mickey D's inexpensive offerings.

McDonald's dollar menu looks pretty appetizing in an ominous economy; even competitor Wendy's (NYSE:WEN) is lowering prices to compete with McDonald's dollar double cheeseburger. And overall, the company must be doing something right -- McDonald's November same-store sales just clocked in with 8.2% growth, with notable increases from breakfast and coffee. Comps have had positive increases for four years now, a feat many of McDonald's rivals can't match.

Same-Store Sales















Burger King (NYSE:BKC)





I'm lovin' it overseas
Diversifying your portfolio with global companies is beneficial, if not vital, for any investor. But this doesn't always require purchasing ADRs or pink sheets. Taking advantage of U.S.-based companies that also operate overseas, such as McDonald's, can also provide your portfolio with international exposure. The company is serious about focusing on global expansion, and it plans to more than 20% of its company-owned restaurants in the U.S. to fund its worldwide efforts.

Talk about a win-win-win. McDonald's gets money from the sale of each restaurant, a franchisee gets ownership of that location, and McDonald's will get continued rent and service fees from the franchisee, without having to pay for the operations of each franchised business. Owning fewer domestic units will free up management to concentrate on growing its business in high-growth locations abroad.

The monarchs of McDonaldland
In its executive ranks, the company tends to promote from within, ensuring that its top management truly knows the business inside and out. Currently, McDonald's is led by Jim Skinner, a 36-year veteran who started out as a restaurant manager trainee. Since he assumed the CEO spot, the company's share price has increased by nearly 100%.

McDonalds is a company you should be buying right now. 2008 should bring healthy returns for the Golden Arches, perked by strong coffee and international growth initiatives. But that's just my opinion. Tell the world what you think by logging into our free investment community, Motley Fool CAPS, and sharing your opinion on McDonald's long-term prospects.