Jim:
So what's more
appetizing than all
of this food (that
Jim is surrounded
by, with KFC, and
Pizza Hut food all
around him)?... How
about a brand that
could help put
America back on
track?...
I'm talking about a
chance to invest in
America, and the
companies that stand
to profit, even in
tough times...
especially in tough
times... If you want
to know about the
global economy, the
best people to ask
aren't the
economists, they
aren't the Fed New
York guy... and
they're definitely
not the central
bankers around the
globe, who've been
well behind the
curve, and better
cut big tonight, or
else we're really in
trouble, after the
Cisco forecast that
was so miserable...
So, their
half-fighting a war
against the specter
of inflation, while
we are headed into
perhaps the worst
deflationary spiral
since the Great
Depression...
Now, the people you
need to hear from
are the people who
produce Colonel
Sanders, the
Chihuahua, and Taco
Bell commercials.
And, even though
he's never been
officially
associated with the
brand, Pizza the
Hut, from movie
Space Balls...
See all
of
tonight's
stocks
mentioned
on
Yahoo!
Finance,
here...
Wednesday,
November 5, 2008
(Cont'd from
above)...
Or, to put it
simply, you need to
look at
Yum! Brands (YUM),
which owns all of
these chains and
operates over - get
this - 35,000
restaurants across
the globe... many of
them in China as
well as Russia.
If you want to know
about the strength
of these
economies... about
raw costs, labor
costs, healthcare
costs... then YUM is
your barometer.
So, how is YUM
doing? Is it still
yummy?...
When YUM reported
its third quarter,
back on October 8th,
it had a 4-cent
earnings beat.
Same-store sales
were strong across
all divisions... up
4% in the U.S., 4%
international and 5%
in mainland China.
But, if that's the
case, why is YUM
trading at just 14x
earnings?... an
historical discount
to its five-year
average of 17.4x...
Is something wrong
with the stock,
which was down $2.27
today?... Are there
troubles with the
company?...
Well, management did
say its margin in
China and its
profitability
declined 2.3%
year-over-year
because of high
chicken costs. But
the company's also
confident that the
decline is
temporary, despite a
same-store sales
growth slowdown.
I think the American
people want to know,
are margins getting
squeezed at YUM or,
more importantly, is
Colonel Sanders
finally being
outranked by General
Cho?...
YUM already
acknowledges that
U.S. consumer
spending could be
challenged, but
could the recession
make things worse
than expected? Does
this company still
work?
You know I've liked
it from the get-go
of the show. I want
to say yes but,
before I do, let's
do the homework and
talk to David Novak
who, by the way,
this is a great
book... The
Education of an
Accidental CEO...
He's the chairman,
president and CEO of
YUM.
Mr. Novak, welcome
to Mad Money...
The bottom line!:
Alright guys... the
market's not good
here, okay... You
know what I've been
saying... When
stocks go down to
the point where
their dividend is
accidentally high,
or their
recession-resistant,
or they're back to
their cash levels,
then I'm all over
them. Everything
else, we're taking a
wait and see
approach... I've got
Yum! Brands (YUM)
down here with a 3%
yield. When it gets
to 4%, I'm not even
going to do anything
other than close my
eyes and buy. Until
then, we've got
watch, because this
market is - as we've
been saying over and
over again -
extremely
treacherous.
