Yum! Brands likes its international prospects

Market pullbacks and periods of protracted economic sluggishness are not the most calming circumstances, but they do create buying opportunities, and with the above in mind, Yum! Brands is worth an evaluation.

Yum! Brands (NYSE: YUM) operates the world's largest fast food operation network, including signature chains Kentucky Fried Chicken, Pizza Hut, Taco Bell, and Long John Silver's.

Analysts like YUM restaurant opening timetable, with 1,000 net new restaurants expected to open annually, with impressive international restaurant growth. Operating costs are reasonable, and margins are solid.

Further, China operations may see a 20-30% earnings growth in 2008. Overall 2008 earnings are likely to grow 10-12%. Moreover, in what may become a new chain concept or a variation of an existing format, YUM is experimenting with grilled chicken at its KFC restaurants. The Reuters F2008/F2009 EPS consensus estimates for YUM are $1.87/$2.11.

The risks? Analysts are keeping an eye on YUM's food ingredient costs, and marketing expenses.

The First Call mean rating for YUM is: Hold. [14 firms.] Mean 2008 target: $40.00. [high: $43, low: $37.]

Stock Analysis: Yum! Brands is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from YUM's shares. Sell / Stop Loss if you were to purchase shares in this company: $27.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.