Can You Make Some Dough With These Pizza Chains? Yum! Brands, Inc. (YUM) and More

Of course, pizza is only part of Yum’s business, accounting for roughly 37% of its global restaurant base.  The company’s other restaurant concepts provide diversification against a shift in consumer preferences, but the business model also has potential risks.  In December, the Chinese government started investigating the food procurement practices of Yum’s KFC unit, when customers complained of sickness that they contracted after eating at various KFC locations.  Despite the short-term decline in its China sales growth, the region is a primary focus for Yum and provides the greatest source of potential growth for the company over the long run.

Pizza’s popularity continues to remain strong in the 21^st century, with a stable, growing share of the overall restaurant industry.  While these three competitors are positioned for future sales gains, their strong stock price appreciation over the past few years have left each of them with P/E multiples north of 20.  Therefore, investors should put them on the watchlist and wait for a rainy down day in the market before adding them to their portfolio.

The article Can You Make Some Dough With These Pizza Chains? originally appeared on Fool.com and is written by Robert Hanley.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.