Yum! Brands' Delicious Outlook

Achieving consistency over a long period of time in the restaurant business is a difficult task. One company, Yum! Brands, Inc. (YUM) has done that and more recently beating analyst estimates and raising 2008 earnings estimates. Yum! Brands operates well known names like Taco Bell, KFC and Pizza Hut. That type of diversity in the restaurant business has proven to be the key to its earnings power. Yum! Brands has also started to capitalize on the potential of the overseas market, being a pioneer in the Chinese food market. It is this expansion into China that could propel the company's growth in coming years. According to CEO David Novak, Yum! Brands is opening one new restaurant per day in China and growing in other countries as well.

A few things have contributed to the success of Yum! Brands (YUM). The company's restaurants are heavily saturated within the United States, but huge growth possibilities exist overseas. Countries like China could support 10,000-15,000 new restaurants and still not be saturated. Yum leads the way in re-shaping brands like KFC to meet Chinese cultural tastes. The company also has a 3-year leg up on its closest competitors like McDonald's. With China and other emerging countries representing huge expansion areas, Yum! Brands should have bright times ahead. Furthermore, its diversity across the world means it also has less exposure to the weak U.S. dollar.

In addition to attractive fundamentals Yum! Brands also has a great looking chart. Shares recently broke out of a reverse head and shoulders pattern past key resistance of $35.00. With the Blue Skies Breakout pictured above and an overseas growth story YUM could be a double for investors with a 2-3 year time horizon. Furthermore, YUM seems like an extremely safe way to play growth in emerging countries. After the post earnings run-up, its share price
should come back to compelling levels below $36.00, a great risk/reward entry level.

Disclosure: none