Two Big Pluses For Yum!

Article Excerpt

One-product companies can be great moneymakers when demand for their product is strong. But profits can evaporate when a competitor comes along with a slightly better alternative. For that matter, when a company depends too heavily on, say, Wal-Mart or any one buyer (or class of buyers, or geographical area, and so on), its bargaining position can quickly erode. In extreme cases, it may feel more like a sharecropper than an independent business. That’s one reason why we like Yum! Brands, a fast-food operator with five distinct banners. In addition, U.S.-based Yum is now the largest fast-food company in China. This was once a niche market. Today, however, China’s middle class of about 300 million people is roughly equal to the population of the United States. YUM! BRANDS INC. $49 (New York symbol YUM; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) operates around 32,000 fast food restaurants in over 100 countries. That’s more outlets than McDonald’s (see box on page 62),…

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