The company is very profitable and in healthy financial position. It has a profit margin of 10.8% and a ROI of 27.7% is strong. The recent Chinese chicken scare cut the company’s quarterly income, so its P/E ratio around 24 should be taken with a grain of salt. In the coming year Yum! China’s income and sales will stabilize, boosting total income and bringing its P/E ratio down.
In many countries the middle class continues to grow, even as overall growth rates fall. In recent decades the world witnessed a huge commodity boom. Now it is time to invest in popular consumer products with attractive price points. Google Inc (NASDAQ:GOOG) and Yum! Brands fit the bill. ARM Holdings plc (ADR) (NASDAQ:ARMH) is another good company to consider, but it is better to wait until its valuation comes down.
Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google.
The article The BRICS and the Bathwater originally appeared on Fool.com.
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