Only two companies of the thirty in the DJIA had a positive year in terms of stock price last year. Those were McDonald's (NYSE: MCD) and Wal-Mart (NYSE: WMT).
According to The Wall Street Journal, "The only two Dow stocks to rise in 2008 were Wal-Mart Stores, with a 18% gain, and McDonald's, up nearly 6%."
No one should be shocked. Although they are in different industries, they share a great deal in common. Each stands for "high quality, low cost" products.
While many people do not look to McDonald's for quality food, compare it to the local diner. It compete with that establishment and the local deli more that many analysts would think. People looking for really inexpensive food will go where they need to if they are on a budget. McDonald's is clear, well lighted, and, in some cases, open 24 hours a day.
Wal-Mart would also not be the first retailer to come to mind for quality goods. But, it sells a wide variety of food, clothing, drugs, and other staples, and its sells them at remarkably low prices.
In a recession, price counts as much as any other factor when people are making buying decisions. That makes the low cost provider in most industries a winner.
Douglas A. McIntyre is an editor at 247wallst.com.
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