NEW YORK (TheStreet) -- Shares of Yum! Brands (YUM) rose to a 52-week high of $94.13 on Monday after activist investor Keith Meister spoke about the fast food company at the Sohn Investment Conference.
Meister said Yum! Brands would be an ideal investment for his hedge fund Corvex Management, according to MarketWatch.
The activist also said Yum! Brands should separate its China unit into an independent company. Meister indicated that the company's problems in 2012 and 2013 were "hiccups" that stemmed from China's food regulations.
He predicts that the company's earnings per share have the potential to grow 14 times. To do this, he suggested Yum! Brands spin off its Chinese operations, enter the Chinese end of the business into a franchise agreement with the U.S. brand, and focus on U.S. corporate governance.
Corvex owns $1.5 billion in Yum! Brands shares, which makes it one of the top five shareholders in the company.
More than 6.6 million shares had changed hands as of 1:52 p.m., compared to the daily average volume of 3,984,860.
Insight from TheStreet's Research Team
Paul Price commented on Yum! Brands in a recent post on Real Money Pro. Here's what Price had to say about the stock.
I often recommend selling put options that extend out as far as January 2017. Many traders, however, seem hesitant committing to option trades of that length. Today's nice jump in Yum! Brands shows why using long-term expirations is often the best choice.
You will always take in greater absolute dollars by selling more time, not less. When a nice upward move occurs, there are larger potential gains to be locked in.
Last Dec. 10, I took advantage of YUM's selloff to around $70 to write some YUM January 2017 $60 and $65 strike price puts. Those were pretty conservative puts, as they were out of the money even after YUM's drop. The option premiums of $5.15 and $7 per share lowered break-even points even further.
I was able to close on Friday morning for a fraction of the original selling prices even though there were still more than 17 months until expiration. That captured 60.2% of maximum potential profit less than five months from the trade inception date.
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Separately, TheStreet Ratings team rates YUM BRANDS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate YUM BRANDS INC (YUM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
You can view the full analysis from the report here: YUM Ratings Report