JBL: Eat 'Em Up

In a country that likes duck, Yum has educated the Chinese people successfully to enjoy the delicacies of fried chicken and pizza.

The revaluation of the yuan, along with continued love of the Colonel's yard bird, only will help profits in the fast-growing Chinese division.

Worldwide, Yum brands has more than 34,000 restaurants, with 13,000 outside the U.S. In 2004, Yum opened three new restaurants a day, making it one of the fastest-growing retailers in the world.

Yum Brands has perfected the art of multibranded restaurants. The company has operating cash flow of over $1.3 billion. Yum has announced a $500 million share buyback.

A negative for Yum's KFC unit is a potential avian flu outbreak. The Associated Press has reported that KFC has already filmed commercials reassuring people of the safety of eating cooked chicken in the event of a breakout. I do not believe that the bird flu will affect earnings for the KFC division.

At under $50, Yum is a good buy on a great and innovative restaurant franchise.

The Golden Arches

When I first started wrestling in Japan, I would've paid a huge premium for a McDonald's cheeseburger. Today, they are everywhere.

The old Peter Lynch mantra of "own what you know" applies here. I see McDonald's everywhere I go, in every airport, Wal-Mart (WMT Quote) and shopping center, and they are all busy. That simple analysis tells me how successful this company is.

But dig just a little deeper and you'll find McDonald's has over $4.5 billion in operating cash flow with over $1.5 billion in free cash flow. They don't just make food, they print money.

McDonald's is using this money for shareholders. Since 2002, the company has doubled its annual cash dividend, and the stock currently yields 2%.