This fast food giant beat earnings estimates by $0.04 last quarter, and three analysts recently raised their EPS forecasts for the company.
Yum China Holdings, Inc. (YUMC)
From Positive Patterns
Yum China Holdings, Inc. (YUMC) is off to a good start for us, and I think this is a prime growth stock for the future. The Chinese love chicken. It’s cheap and can be used in so many different ways and is considered a staple.
I think we will see some huge growth in the KFC location-numbers in China. YUMC has an A+ balance sheet and a very profitable business; most locations are easily ‘in profit’ the 6 months.
There is some talk that this company would be better-off split up (and it was a spin-off from YUM!). It may be that the company will either sell or spin-off Pizza Hut and Taco Bell. Then, YUMC/KFC would be a very impressive stand-alone growth story & would probably get a higher multiple than it does now.
The stock has been very strong, making new highs. I would buy YUMC up to $46, but watch for a pullback here toward $41-42, which seems possible. So, I would not jump in 100% right here. Maybe you can buy a quarter or a third position and then see what happens.
This is a very good story and it seems to have some exciting growth potential over the next 10 years. A break over $46 would suggest a major upside breakout and there may be no pullback.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, April 16, 2019