Chinese Trailblazers – Yum! Brands Inc. and Pepsico Inc.

Article Excerpt

Heinz and Campbell Soup no doubt hope they have as much success expanding in China as Yum Brands and PepsiCo: YUM! BRANDS INC. $49 (New York symbol YUM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 468.6 million; Market cap: $23.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.0%; WSSF Rating: Above Average) was the first fast-food company to enter China (in 1987). China now supplies 40% of Yum’s sales, and 45% of its earnings. Thanks to strong sales growth in China, Yum’s 2010 earnings should rise 15.2%, to $2.50 a share. The stock trades at 19.6 times that estimate. Yum Brands is a buy. PEPSICO INC. $64 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $102.4 billion; Price-to-sales ratio: 1.9; Dividend yield: 3.0%; WSSF Rating: Above Average) gets around 10% of its sales from China. This figure should rise over the next few years as the company builds 10 to 12 new soft-drink and…