Yum! Brands (YUM)

Earnings came out after the closing bell. They missed by a couple of pennies and their revenue line was slightly weaker. She believes in the long-term secular story of the expanding middle class in China. Penetration of restaurants per million of population is very low compared to developed markets. China is 35% of this company’s earnings. India is their next growth target.

Fundamentals are good. Trend is up. The recent sell off was due to a supply chain problem. He bought a few days ago.

Excellent restaurant company with very good brands. One of the best exposed to longer term growth in China. They are having some short term issues, primarily in China, where same store sales are down. Having some issues with their KFC franchise so short term growth is stagnating a bit.

Had some issues which affected the traffic temporarily, but it did recover. Indicated their traffic is going to be down but is improving. This creates opportunities to Buy. China’s consuming middle-class of 300 million people is going to grow to 600 million by 2020. Also, focusing on growing in India. Casual dining is very low in these areas. Yield of 2.05%.

The thing to watch out for on this is speculation that they might get involved in the whole Burger King/Tim Hortons thing from a tax perspective. You might get the shares bid up a little bit on speculation, and she usually stays away from these scenarios.

She is still bullish on it. It is very dominant in China and one of the main reasons she owns it. 40% of profits come from China. They reported their same store sales last quarter and it jumped, then there were supplier issues. This is the time when you buy the name as China urbanizes.

This company and others were all using the same supplier, who has been taken out of the chain. This is a real growth stock and a quality run company. Expanding hugely in India. Dividend yield of 2.12%.

(A Top Pick Jan 7/13. Up 15.01%.) Had some difficulties in 2012 due to supply issues and then the avian flu hit. Margins declined. Feels those problems are temporary and are resolvable. 2014 should be a good year for them. Company is anticipating that comps in China in the last half of this year will be double digit once again.

(Top Pick Feb 9/13, Up 14.86%) Got stopped out in the middle of the year due to a flu breakout. He bailed and was even. Then the stock went higher. It came back down in the summer and he bought back in again. It went sideways for most of the year but is really a growth story in Asia, opening a restaurant every week, Taco Bell, KFC, etc. They have such an appetite in Asia for Western food. It is a great way to participate in the Asian market and the bird flu fears are behind them. The market is very resilient for them. There is great demand for the product over there. The market will assign higher multiples when they see the growth come in.

This was a top pick on Feb 8/13. Got wind that the poultry flu was going through China and scared the shoppers in stores so sold his holdings in May. Stock came back to where he thought it should be and he re-bought again in October.

(Top Pick Apr 29/12, Down 5.52%) He shrank the position. He is still short the stock. View is that China will grow at a fairly healthy clip and YUM can participate in that.

(A Top Pick August 1/12. Up 14.24%.) Still likes. They are going to have their short-term hiccups as they did in China. The Chinese consuming middle-class is supposed to grow from 300 million to 600 million by the end of this decade.

Likes the company and feels they have a number of high-quality brands. This has been the “go to” stock in the quick service restaurants for international growth. Very strong franchise growth in China. Got a little bit ahead of itself. He would look for a better entry point. There are better names in the US that are more domestically focused.

(A Top Pick June 12/12. Up 15.77%.) Has been running into some problems in China, which is a concern but long-term she expects the outlook for this company is very good. Still likes.

Trades at 20X earnings with a 2.1% yield but China is the big issue. The jewel in the crown is the Taco Bell franchise. The real crux of the issue is the KFC franchise in China with the avian flu. There are some negative issues about the story but they have some really great franchises that make a lot of sense and will do well over the long term. If you see a larger pullback in the stock, he would try to get it at around 15X earnings.