Yum! Brands: Great Potential in China and Other Emerging Markets

A New York presenter likes Yum! Brands here (NYSE: YUM, $37.63). The company has a tremendous opportunity in China. It's the largest QSR chain there, but the penetration rate is only 3%. MCD is the only true global competitor in the country. The company can count on years and years of expansion in other developing countries as well. Management is working to reverse declines in the domestic market, and there have been signs that the US operation is improving. The Street's expectations for a turnaround in NA are low, so if the company is successful, the upside could be significant. The presenter forecasts EPS to reach a $3 run rate within 18 months. At 15x earnings, his target is $45.