3 Stocks to Buy in Times of ‘Irrational Exuberance’: The Coca-Cola Company (KO), McDonald’s Corporation (MCD), The Walt Disney Company (DIS)

DIS data by YCharts

Just like Coca-Cola, Disney bounced back from the recession and rocketed to fresh highs. Disney also pays a moderate dividend to patient investors, with a 1.32% yield.

McDonald’s Corporation (NYSE:MCD)

Fast food giant McDonald’s Corporation (NYSE:MCD) is the most recognized restaurant in the world. Although the company has been weighed down by problems in Europe, which accounts for approximately 40% of its revenue, it has survived the downturn while continuing to post positive top and bottom line growth.

MCD data by YCharts

McDonald’s same-store sales have been far less impressive than its industry peers, declining 1.5% in February, with a 0.5% slide in Europe.

However, my reasoning for investing in McDonald’s is simple – if the company can withstand a crisis the magnitude of the Euro crisis hitting its largest market, then think of what it can do when Europe recovers. Its 3.13% dividend yield is also higher than either The Coca-Cola Company (NYSE:KO) or Disney’s.

The Foolish Bottom Line

Investors should always be aware of one thing – the stock market is a cycle, full of peaks and troughs that often result in premature selling and buying that results in frustration and steep losses. Keeping an eye on the Shiller P/E ratio and insuring that your portfolio is loaded up with tennis balls, rather than fragile eggs, is simply the responsible thing to do to protect yourself in the event of a sudden downturn.

The article 3 Stocks to Buy in Times of ‘Irrational Exuberance’ originally appeared on Fool.com and is written by Leo Sun

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