Weight-loss drug fears hurt fast-food stocks

Article Excerpt

The launch of new weight-loss drugs like Ozempic, which cause people to eat less, has hurt fast-foods stocks like Yum and Yum China. However, these drugs come with serious side effects, which limits their use. We feel these companies’ top brands will continue to attract customers, particularly in overseas markets. YUM! BRANDS INC. $120 is a buy. The company (New York symbol YUM; Consumer Sector; Shares outstanding: 280.2 million; Market cap: $33.6 billion; Price-to-sales ratio: 4.9; Dividend yield: 2.0%; TSINetwork Rating: Average; www.yum.com) operates over 56,000 restaurants in more than 155 countries—67% of those outlets are outside of the U.S. Its main banners are KFC (fried chicken), Pizza Hut and Taco Bell (Mexican food). Franchisees operate 98% of those locations. Yum continues to upgrade its online ordering systems as part of its plan to get 100% of its sales through digital channels. That includes installing more self-serve ordering kiosks at its restaurants. The company is also using artificial intelligence (AI) software to drive its sales and…