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Traders Agency > This Fast Food Leader Just Had A Great Quarter
This Fast Food Leader Just Had A Great Quarter
This week, we are presenting a company that is a leader in the fast food and fast casual dining market.
It has a collection of iconic US brands that continue to be sought out by consumers on a daily and weekly basis. And it has a great track record at bringing these brands around the globe to ever more eager new and expanding markets.
At Top 5, we have been following this company as well as the rapidly recovering and now advancing market for food outlet and restaurant sales. And this is the top stock in the US market for you to trade this week.
Indeed, this stock is set for a further quick gain in our trade this week for our Top 5. And we project a nice potential return in this branded restaurant stock that the US and increasingly the world is embracing for its products and services.
This continues our successes in our stock trades inside Top 5 with the average return on our hit stock trades at 7.66% for a total gain for hit trades running at 543.71%. And for the stock option alternatives presented for many of the stocks, the average gain for hit trades is running at 41.99%.
So, for weekly hit stock trades and stock option alternatives, these returns add up and can compound to amount to four-figure returns over the year.
The Yummy Trade for this Week
Yum! Brands Incorporated (YUM) is the Louisville, Kentucky-based company that primarily runs the Kentucky Fried Chicken (KFC) and Taco Bell restaurants as well as Habit Burgers and some other offerings, including the Cantina-branded Mexican outlets with limited beer and wine offerings.
Food and restaurant sales took a big hit last year with the economic lockdowns that shut the doors of many outlets. But takeaway and deliveries quickly became the solution. For Yum! Brands, its outlets were already set up perfectly for remote buying, aiding the company during the worst of the lockdowns.
However, from the trough in the Spring of 2020 through to now, sales at restaurants in the US alone have not only rebounded but continue to strongly advance.
In fact, they have reached levels that well exceed the pre-lockdown levels from early 2020, as the data from the Saint Louis Federal Reserve Bank shows in the graph above.
Sales continue to advance with the most recent reported quarter showing a major gain over the previous year’s equivalent by 33.72%.
But for many restaurants and food companies, costs have become a bigger challenge this year. Food input costs have been firmly on the rise, and labor shortages have brought the need to boost wages, bringing big costs for both the kitchens and service staff.
For Yum! Brands, this has been a challenge that the company has vanquished. The gross profit margin for the recent quarter provided the proof with margin running at a whopping 47.54%.
So, more folks are buying fried chicken and American-Mexican cuisine as well as other products from Yum! Brands outlets, and the company is profiting more on those sales.
The stock continues to reflect the company’s performance with a gain of 15.51% on a year to date basis.
And now, with the US consumer flush with cash, eager to spend and capable of spending on fast food and fast casual offerings, Yum! Brands is capitalizing, and the market is taking notice and buying the stock.
Here is our latest analysis for the stock trades and how it sets up for this week.
The trade to make for Yum! Brands is to buy the shares now and hold it for the initial target price of $127.98. And in turn, we may see it further climb to a bigger target level of $132.71.
From the current price of around $126.43, it represents a potential cash gain on the shares of 4.97% to the bigger target price for a short-term trade.
Keep on trading,
Editor, Top 5
P.S. This is a great pick, but it’s still only one out of my Top 5. To find out about the rest of the trades I’m recommending, complete with specific entry and exit points, you need to click here and join me on the Top 5 journey…
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