Yum Brands controls 5 different concepts. KFC, PIZZA HUT, TACO BELL, Long John Silver and A&W. YUM Brands now has 36,000 restaurants in 110 countries and continues to open more outlets every month. Recently I watched a special on TV about Asia and people are lined up outside KFC, Taco Bell and Pizza Hut. In China KFC is incredibly popular. The sales figures show that while YUM is growing slowly in North America, they are growing rapidly in Asia. Overall the trend is for more growth.

McDonalds has a market cap of 60.91 Billion. Yum Brands is now at 15.64 Billion and growing faster than McDonalds. Every year Yum Brands has increased its market cap. It is now 25% as large as McDonalds. It is definitely a large cap player and will be around for quite some time. While I am not interested in owning this stock, I don’t expect a bankruptcy soon. This means if the stocks falls, I get assigned and/or I have to average down, I can do so with enough confidence that I don’t have to worry about my investment being wiped out.

Yum's revenue per share is 23.31 (as of 2009) which is higher than McDonalds. Revenue is currently around 10.9 Billion and debt is 3.55 billion, however much of this debt is long term. Quarterly earnings growth is about 35 %. In contrast McDonalds revenue is 22.56 billion with a debt load of 11 billion spread out from short to long term duration. McDonalds quarterly earnings growth has been ranging between negative 3% to 6%. (2008-2009)

Both companies have raised their dividends almost annually which should lead to some support for YUM as its dividend is now over 2%, which is greater than the S&P 500 average of 1.5%. It's PE is below average.

My goal for YUM is to collect income from naked put writing. When you look at the chart on YUM over the past 3 years, the company has a trading range between about 25.00 and just over 40.00. On the chart, the yellow highlight is showing the share price of 30.00. For writing naked puts if I stay close to or below $30.00 I should be able to minimize the chance of assignment to perhaps once or twice each year. Should I get assigned I should be able to sell the stock through covered call writing as I will be in the low range for this stock. The chart looks promising for selling naked puts. At times I will use the "reverse ladder approach" so I can sell puts below 30.00 for decent premiums. My goal would be to try to earn 12% annually. Looking at the chart, even when this stock pulled back in Sep 2008, Nov 2008 and Mar 2009, all three times it recovered to above 30.00. Therefore I feel confident that I can sell puts below the $30.00 strike, as far out as 6 months, being aware that I have about a 25% chance of being assigned. However unless something dramatic should befall Yum! Brands, I have a 99% chance that the stock will at some point during the year recover to $30.00, so I can be exercised out of any assigned shares. Let's see how I do.