Should You Add YUM! to Your Portfolio?
When it comes to corporate earnings, people look to firms that can generate growth for many years. Long-term investing is about making inroads either in new markets or in new technologies that will take market share from competitors. When it comes to expanding in new markets, American restaurants have a tremendous potential in foreign countries.
The latest example of international expansion—as well as a recent rebound in the U.S. market—helping to drive corporate earnings is YUM! Brands, Inc. (NYSE/YUM). YUM! is the parent company of Kentucky Fried Chicken (KFC), Taco Bell, and Pizza Hut. The company recently posted corporate earnings growth of 23% for the quarter year-over-year. While some people are worried about higher costs, the company was able to actually increase its restaurant margin to 18.9%, up 1.9% from last year.
Interestingly, the company cited that, compared to last year, the U.S. market is having a rebound. Part of this, I believe, is due to its expanded menu and offering consumers an alternative choice to Chipotle Mexican Grill, Inc. (NYSE/CMG). YUM!’s Cantina Bell restaurant is showing strong signs of domestic growth, helping drive the stock’s corporate earnings. Taco Bell’s same-store sales in the U.S. rose six percent, compared to the year-ago period; obviously, demand is increasing domestically. Read More http://www.investmentcontrarians.com/stock-market/should-you-add-yum-to-your-portfolio/793/