There is an ongoing debate about just how much international exposure you get when you buy big multinational companies like those represented in the S&P 500. These companies are benefiting from overseas growth, but do the stocks trade more like their domestic markets or overseas markets? What investors really want is to have their cake and eat it too by owning presumably big, safe, quality domestic companies like the Coca Colas of the world while benefiting from overseas growth without all that pesky political/financial/economic risk. A company like Yum Brands which has a huge presence in China represents a good example of this dichotomy. In the case of Yum! Brands maybe less interesting than the idea of correlation is what effect this diversification has had on its valuation. In today’s screencast a glance at Yum! Brands.
Items mentioned in the above screencast:
How exposed are you to overseas markets when you invest in the S&P 500? (Systematic Relative Strength)
Yum! Brands continues its push into China with its acquisition of the Little Sheep restaurant chain. (beyondbrics)
How the “beef scare” hurt Yum! Brands. (footnoted)
A rising price/sales ratio at Yum! Brands. (YCharts)
Relative price chart of YUM, FXI, XLY. (StockCharts)