Stock Showdown: McDonald’s Corporation (MCD) Vs. Yum! Brands, Inc. (YUM)

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Yum! Brands on the other hand said that its expansion in China hasn’t yet come to an end and is planning new openings. A chicken supplier scandal in China during the last year has however hurt the KFC brand there, and Yum! Brands is still recovering from the incident. In the U.S, Yum! Brands, and particularly KFC, are struggling with lower sales and a weaker demand as well. As if that wasn’t enough, the avian flu among chickens in the U.S threatens to increase the price of chicken, hurting the business even further through increased costs. Analysts are saying that one major reason for the falling sales is poor marketing from KFC and Pizza Hut, since the markets for chicken and pizza aren’t particularly weak. A future driver for Yum! Brands stock is expected to be the growth in China and in Chinese malls.

One of the major investors in Yum! Brands among those we track was  hedge fund manager Dan Loeb representing Third Point, who took a stake in  Yum! Brands of 3.3 million shares during the first quarter. In McDonald’s, a major shareholder was Southeastern Asset Management led by Mason Hawkins, with its 10.85 million shares. The aggregate holdings by the hedge funds we track increased by 81.8% in Yum! Brands to $1.5 billion during the first quarter, while for McDonald’s the increase was 32.6% to $6.8 billion.

we also track insider activity at Insider Monkey, given its statistical significance in pinpointing good potential buying opportunities when we look at insider purchases. There have been a number of insider sales of McDonald’s’ shares, with Corporate Executive VP, Supply Chain Jose Armario selling 10,000 shares in May. Senior Vice President and Chief Public Affairs at Yum! Brands Jonathan Blum made multiple sales of shares in 2015, over 13,000 in all.

To conclude, If McDonald’s manages to go through its cost reduction program and find a way to attract customers again, the shares do indeed have upside, however in the meanwhile, Yum! Brands seems like the better pick, with stronger present growth and more immediate potential for more.

Winner: Yum Brands! (YUM)

Disclosure: None

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