Is Yum really Yummy?

[katwillny]

Or is McDonal'ds yummier. Looking to get a position in YUM Brands for my ROTH. Im looking to hold long term. One of my concerns is that they rely heavily on revenues from China. I am also looking into McDonald's. What are your thoughts?

Thanks
Kat

[ownyourfuture]

For what it's worth, I own YUM in my taxable account & my IRA
Don't own McDonalds

[clifp]

Quote:

Originally Posted by katwillny Or is McDonal'ds yummier. Looking to get a position in YUM Brands for my ROTH. Im looking to hold long term. One of my concerns is that they rely heavily on revenues from China. I am also looking into McDonald's. What are your thoughts? Thanks Kat

To me one of the features of Yum is that is doing so well in China. The majority of KFC profits and revenues come from China and have done so for probably 5 years. China is an exciting market, but Chinese companies are IMO much less transparent than US companies. I wouldn't completely trust Yum's accounting statement for its Chinese operations but I'd trust them far more than say FoxConn.

M* rate YUM as 3 stars with a fair value of $72, and MCD as 4 stars with a fair value of 105.

[lhamo]

YUM took a significant hit in China recently with the bird flu scare. It has also had issues in the past with food dyes and other food safety related scandals.

If you can buy on one of those downturns (probably past by now) and hold for the long-term, it might be a good investment. I believe they hold both KFC and Pizza Hut, which are amazingly successful in China. Still lots of room for growth as they expand into third tier markets (first and second tier still growing, but not as rapidly as third tier will).

[katwillny]

Thanks for the replies. After looking further into their finances, i went ahead and purchased 50something shares in ROTH and a few more in my taxable accounts. I got in $71.61 yesterday. Thanks again.

[ownyourfuture]

Quote:

Originally Posted by lhamo I believe they hold both KFC and Pizza Hut

Not sure if you're aware of it, but they also own taco bell

Steve