Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Yum! Brands, Inc. (YUM), AFC Enterprises, Inc. (AFCE): Fried Chicken, Tom Brady, and 1 All-Star Stock

Page 1 of 2

With fall looming, yet another NFL season is under way. The thrills of opening day weekend are enjoyed by fans worldwide, but this past week’s action was really a testament to the hard work done by NFL scouts.

After months of scouting, combine workouts, and exhibitions, the scouts and GM’s finally got to see their draft picks perform. In some ways, NFL scouts are very similar to investors.

Scouts look at fundamentals and, like investors, can be swayed by hype, fear, and biases. Sometimes, scouts and investors alike, ignore a star in the making, even as its flashing signs of brilliance right before their eyes.

The Tom Brady of the chicken game: Popeye’s
In the 2000 NFL draft, future hall of fame quarterback Tom Brady fell hard on draft day. Despite setting records during his time at Michigan, Brady somehow fell to the Patriots in the sixth round, as the 199th pick.

Yum! Brands, Inc. (NYSE:YUM)You see, Brady could never escape the limelight of heralded  quarterbacks Brian Griese and Drew Henson during his time at Michigan. Brian Griese’s father, Bob, was a Hall of Famer himself. When Brady finally got playing time, during his Junior and Senior years, he still flew under the radar, even as he set school records.

The relationship between Brady, Griese, and Henson, kind of reminds me of the relationship between chicken “front runner” Yum! Brands, Inc. (NYSE:YUM) and AFC Enterprises, Inc. (NASDAQ:AFCE).

While everyone expects Yum! Brands, Inc. (NYSE:YUM)’s KFC to continue to dominate the world of chicken internationally, especially China where it’s been since the 80’s, a new star may finally be ready to emerge.

While Yum! Brands, Inc. (NYSE:YUM) boasts nearly 6,000 Chinese locations, they’ve suffered mightily over the past two years, due to a food quality scare that has been based both on fact and rumor. This is all a by-product of Chinese outrage and fears that started with tainted milk, as far back as 2008, and the bird flu. In 2012, following gains in excess of 20%, Yum! actually reported a drop in Chinese sales.

Yet, even with recent struggles, Yum! Brands, Inc. (NYSE:YUM) has shown the world that a huge opportunity for chicken exists in emerging markets. Yum! still only has 2 restaurants for every 1 million people in emerging markets, compared with 58 per 1 million in the U.S.

Which brings us to Popeye’s, the Tom Brady of the chicken game. Popeye’s parent company, AFC Enterprises, Inc. (NASDAQ:AFCE), recently reported second quarter earnings to die for; they handily beat consensus EPS expectations by 6.1%, and they grew earnings 29.6% year over year.

Popeye’s is Tom Brady in 1999. It has all of the upside of KFC, without the negative public relations. Popeye’s management also seems ready to take KFC head on, by launching taste tests and pushing press releases out when they win.

If Yum! Brands, Inc. (NYSE:YUM) can garner 42% of its KFC profits from China, even with such a small per-person footprint compared to the U.S., you have to wonder what could Popeye’s do in a few years time?

The blocking and tackling of restaurant expansion
Is now the right time for AFC Enterprises, Inc. (NASDAQ:AFCE) to take Popeye’s international? Sure, it gained 4.4% of market share in dollars of chicken last year, but taking on Yum! Brands, Inc. (NYSE:YUM)’s size and scale abroad could be a different story.

In a recent interview on Mad Money with Jim Cramer, AFC Enterprises, Inc. (NASDAQ:AFCE) CEO Cheryl Bachelder said that Popeye’s could “double” its footprint in the U.S., and had big plans overseas. Popeye’s  will attempt to expand aggressively, but I won’t pretend to know if it will be successful.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!