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.

CKE Restaurants (NYSE: CKR) reported earnings for the fourth quarter yesterday after the bell. Total revenue decreased 3% for the quarter, and net income from continuing operations was $0.00 per diluted share, which wasn't too good in comparison to last year's number, which was $0.17 per diluted share. Total revenue was flat for the year, and net income from continuing operations was $0.57 per diluted share versus $0.77 per diluted share in the previous fiscal year.

CKE Restaurants, which operates the Carl's Jr. and Hardee's brands, did not impress analysts, as earnings expectations for the quarter were missed by two pennies. I myself wasn't too impressed with the entire report. Same-store sales increased 0.9% at Carl's Jr. and 2% at Hardee's for 2007 -- I'm not going to jump up and down over that bit of news. In addition, costs are up because of inflationary pressures, and revenues have obviously been challenged. There's not a lot that I like about this story.

CKE's stock is certainly on the lower end of its 52-week range, but I can't say it is necessarily cheap; it closed yesterday at $12.45 -- the high for the year on the stock is $23.24. This is a situation that calls for an old standby: "There are better opportunities out there in this space." For me personally, if I'm looking at the burger business, I'm way more likely to consider a McDonald's (NYSE: MCD), a Burger King (NYSE: BKC), or a Wendy's (NYSE: WEN) before I entertain CKE as an investment idea. Although they don't do burgers (so far as I know), I'd even look at a Yum! Brands (NYSE: YUM) before CKE. These companies have better brand equities in my estimation. CKE may turn itself around, but I just wasn't impressed by my look at its data.

Disclosure: I own none of the companies mentioned here; positions can change at any time.

Chipotle Mexican Grill (NYSE: CMG) experienced some delicious growth over its fourth quarter and full-year reporting period. As the press release issued on Valentine's Day after the market closed indicated, Q4 revenues spiced up almost 32% to $288.9 million, and diluted earnings soared 61% to $0.53 per stub. For the full year, revenues jumped 32% to $1.1 billion, and diluted earnings rocketed 66% to $2.13 per share.

But was this enough to satisfy the after-hours market? Nope -- at the time of this writing, the after-hours quote on Chipotle's stock was down almost 13%. I'll give you a second or two to guess why. Got it yet? Sure you do -- even if you hadn't already read the headlines, you must have intuited that Chipotle didn't meet analyst expectations. The sacrosanct Wall Street crowd wanted a couple pennies more for the quarter.

Well, I say the Chipotle story looks pretty good from where I'm sitting. Restaurant operating margins are up, comps are up over 10% for the quarter and the year, and new stores will continue to be rolled out. Plus, operational cash flow increased 42%. Chipotle, which used to be a part of McDonald's (NYSE: MCD), is becoming a major brand in the restaurant sector, and is a strong competitor against related companies such as Burger King (NYSE: BKC), Wendy's (NYSE: WEN), and Yum! Brands (NYSE: YUM).

Yes, economic times will be difficult going forward, as Ben Bernanke has warned, but I've got a sneaking suspicion Chipotle Mexican Grill's stock will recover from the recent pullback from its 52-week high of better than $155.

Media giant News Corp. (NYSE: NWS) and fast-food operator Yum! Brands Inc. (NYSE: YUM) are scheduled to report earnings later today. Here's a quick peek at them ahead of results.

News Corp. has only fallen short of earnings expectations in one of the past eleven quarters. When the company reported fiscal 2008 first-quarter results back in November, earnings came to 23 cents per share, beating the consensus forecast of analysts polled by Thomson Financial by a penny. Earnings were 28 cents per share in the previous quarter, and 19 cents in the first quarter of 2007. For the current quarter, analysts expect earnings of 27 cents per share.

News Corp.'s 26% earnings per share growth forecast for the next year is better than the industry average and the S&P 500. The analysts' consensus recommendation has been to buy News Corp for at least six months. Shares slipped to a 52-week low of $17.84 in January, but closed Friday at $20.01.

For news on MySpace, Fox News, and anything else that could influence the earnings results, see BloggingStocks' NWS coverage.

YUM! Brands (NYSE: YUM) operates the greatest number of fast-food locations in the world, with more than 34,500 stores in over 100 countries. Its flagship chains include chicken specialist KFC, pizza server Pizza Hut, and quick-service Mexican leader Taco Bell. YUM! also operates the Long John Silver's seafood chain, along with several hundred A&W root beer and burger stands. The company operates just over 20% of its restaurants. The rest are either franchised, or licensed locations. Burger King (NYSE: BKC) and McDonald's (NYSE: MCD) are major competitors.

The firm surprised the Street earlier in the week when it announced Q3 EPS of 50 cents and revenues of $2.56 billion. Analysts had been expecting 45 cents and $2.46 billion. Management also raised FY07 EPS guidance from $1.63 to $1.65, versus Street consensus of $1.64. The Board authorized the repurchase of an additional $1.25 billion of common stock, boosting the total repurchase plan to $4 billion over the next two years. The stock popped on the news and has since passed into the initial stage of a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Yum! Brands Inc. (NYSE: YUM) shares are trading higher today after a recent report showed that retail food service sales are growing faster than most restaurant sales – good news for Yum!, which has several restaurant operations set up in convenience store and supermarket locations. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on YUM.

After hitting a one-year high of $35.05 in July, the stock has sagged a bit in recent weeks. YUM opened this morning at $31.61. So far today the stock has hit a low of $31.60 and a high of $32.06. As of 10:50, YUM is trading at $31.90, up $0.45 (1.4%). The chart for YUM looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $27.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make an 11.1% return in just 4 months as long as YUM is above $27.50 at January expiration. Yum! would have to fall by more than 13% before we would start to lose money.

YUM hasn't been below $27.50 since October of 2006 and has shown support around $30 recently. This trade could be risky if the company's earnings (due out 10/08) disappoint, but even if that happens, this position could be protected by the support the stock formed between $30 and $32 over the past month, plus its 200 day moving average, which is currently at $31 and rising.

Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Brent neither owns nor controls positions in YUM.

Zale Corporation (NYSE: ZLC) September implied volatility Elevated at 38. ZLC, an operator of 2,300 retail jewelry stores, closed Monday at $22.02. Goldman Sachs says, "We are downgrading ZLC to Sell from Neutral as growing macro headwinds, management upheaval, and poor strategic positioning will likely further pressure earnings." Signet Group (NYSE: SIG), a specialty jewelry retailer, terminated merger talks with ZLC in June 2006. ZLC overall option implied volatility of 38 is above its 26-week average of 30 according to Track Data, indicating larger price risks.

YUM! Brands (NYSE: YUM) implied volatility Elevated into Analyst meeting. YUM closed Monday at $32.72. YUM will host investor meetings in Beijing on September 6-7. Smith Barney has a Buy rating and $38 price target on YUM. SBSH says "YUM's China business is material to the overall business TODAY, representing about 20% of company-wide revenue and 23% of profits." YUM overall option implied volatility of 31 is above its 26-week average of 24 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MOST NOTEWORTHY: Nokia (NOK) and selected restaurants topped today's extensive list of downgrades:

• Due to slowing in the wireless sector, Oppenheimer downgraded shares of Nokia Corp. (NYSE:NOK) to Neutral from Buy, following Texas Instruments' (NYSE:TXN) lowered guidance;
• Citing valuations and a deteriorating outlook, Buckingham downgraded shares of Darden Restaurants Inc (NYSE:DRI) and Wendy's Inernational Inc. (NYSE:WEN) to Neutral from Accumulate, as well as Yum! Brands Inc. (NYSE:YUM) and Jack in the Box Inc. (NYSE:JBX) to Underperform from Neutral.

OTHER DOWNGRADES:

• JP Morgan downgraded Micron Technology Inc. (NYSE:MU) to Neutral from Overweight based on concerns of growing inventory levels and a weaker-than-expected flash market in the first half of 2007.
• Citigroup Inc. (NYSE:C) was removed from Sandler's Focus List.
• Calyon downgraded Johnson Controls Inc. (NYSE:JCI) to Neutral from Buy with an $85 target, citing valuation and the weakening economy.
• RBC Capital Markets downgraded Alcoa Inc. (NYSE:AA) to Underperform from Sector Perform on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Notable companies downgraded today include Tyco Int'l (TYC), 3M Co (MMM) and Yum! Brands (YUM):

• Prudential downgraded Tyco International Ltd. (NYSE:TYC) to Underweight from Neutral with a $26 target, expecting catch-up reinvestment to impact near-term value after the first-quarter break-up;
• 3M Company (NYSE:MMM) was downgraded to Neutral from Overweight with a $84 target at Prudential, as they believe it will take some time for the company to regain its premium valuation as economies in Europe and North America slow;
• additionally, Wachovia downgraded Yum! Brands Inc. (NYSE:YUM) to Market Perform from Outperform, citing slowing sales momentum in the U.S. as well as the sales impact from the E. coli/Taco Bell outbreak, which could affect sales significantly.

OTHER DOWNGRADES:

• YRC Worldwide Inc. (NASDAQ:YRCW) was downgraded to Hold from Buy at Stifel Nicolaus and BB&T, and to Neutral from Outperform at Robert Baird; the downgrades reflect the slowing freight-market demand.
• Integrated Device Technology Inc. (NASDAQ:IDTI) was downgraded to Sell from Source of Funds at ThinkEquity, citing near-term trends, the softer-than-expected outlook for March and expectations for increased competition in AMBs.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: The Homebuilding Sector, Research in Motion (RIMM) and Yum! Brands (YUM) were the most notable companies on today's extensive list of downgrades.

• Credit Suisse downgraded to Homebuilding Sector to Underweight from Market Weight as they believe the "seasonal trade is nearing an end," P/E ratios are at peak levels, new supply is getting worse, the potential for large impairments and credit quality issues;
  • specifically, the Credit Suisse downgraded Ryland Group Inc. (NYSE:RYL) to Underperform from Neutral, with a $44 target.
• Research in Motion Ltd. (NASDAQ:RIMM) was downgraded by RBC Capital Markets to Sector Perform and by Morgan Keegan to Market Perform on valuation.
• Yum! Brands Inc. (NYSE:YUM) was downgraded to Sector Perform from Outperform at RBC Capital Markets, citing a constrained share price based on valuation and tough U.S. SSS comps.

OTHER DOWNGRADES:

• Merrill Lynch and Goldman Sachs downgraded the Hershey Co. (NYSE:HSY) to Neutral from Buy, citing lowered growth expectations and a reduced confidence in strategy.
• Met Life Inc. (NYSE:MET) was downgraded to Market Perform from Outperform at Keefe Bruyette & Woods, citing valuation and a more modest outlook for 2007.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

[Update 12-5-06, 12:00pm EST -- the trans fat ban has been passed -- there will no longer be any trans fat products used in NYC-area eateries come July 1, 2007]

New York City is set to ban the use of trans fats in restaurants soon if a new ordinance is passed today. Trans Fats taste very good but have been repeatedly shown to be damaging to health. Many chains like KFC and Taco Bell , both divisions of Yum! Brands , Inc. (NYSE:YUM) have recently said that they will ban the use of trans fats in their food offerings very soon and will replace the bad fats with other cooking alternatives that should leave little to no impact on taste -- but will be much more healthy for patrons.

While there are those who would like the choice of eating artery-clogging and health-damaging trans fats (for some strange reason), I'm glad to see a city like NYC -- which can be a large trend setter -- step up to the plate and consider a bad on a substance that is not good for anyone. Changing the food preparation process to one that does no use damaging fats to one that uses fats that are not damaging -- with negligible or no impact -- makes perfect PR and business sense.

Will this be a problem for fast food and restaurant chains that serve tons of food per day? While all this food may taste good, much of it is damaging to the health of patrons who eat it. This may contribute to the growing obesity problem in this country. I think it is all bout the *taste*. If restaurants can make this change and not change the taste of their foods (or barely change it), then the switch away from trans fats will be a non-event. If patrons sense a change in the taste of their favorite foods -- even knowing that what they eat is harmful to them -- then expect a litany of complaints to start flying from the gluttonous masses.

Today on Jim Cramer's STOP TRADING segment on CNBC, he raved: "the market is making fortunes people!"

He said Yum! Brands, Inc. (NYSE:YUM) and McDonald's Corporation (NYSE:MCD) are winning on food and he was positive on Darden Restaurants, Inc. (NYSE:DRI) and The Procter & Gamble Company (NYSE:PG).

He said the fuel is coming out of oil and out of staples, and "the market is going higher." He even used the "so sue me" disclaimer afterward, but that's Cramer for you.

PepsiCo, Inc. (NYSE:PEP) wasn't that great and he is out of Kellogg Company (NYSE:K).

Phelps Dodge Corporation (NYSE:PD) is big and it is going to par, meaning $100. PD is trading at just under $93.00 as of his comments.

Now here is the problem with his segment; it's not just the criticism he gets so often, that he has too many pieces of advice. He was talking so fast you could barely understand him. He jokes about taking drugs; it would be easier to keep up if you were on speed while you watched.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.