For his third "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer spoke with David Gibbs, CEO of Yum! Brands (YUM) , the restaurant chain.
The company just posted a 20-cents-a-share earnings beat with a 9% increase in same-store sales.
Gibbs said they have adapted incredibly well to the pandemic and have embraced digital ordering and delivery across its brands. Yum has been making investments into technology and operations for years, he explained. Yum has the unprecedented ability to scale, and that's why things like ordering via social media have caught on so quickly.
Gibbs was also excited about Habit Burger, a recent acquisition of 300 locations that he felt could support more than 10,000 stores someday.
We have not looked at YUM since September 15. At that time we wrote that "The charts of YUM look positive and traders could go long YUM in the $95-$90 area risking a close below $85. The $136 area is our Point and Figure target."
Let's go to the charts.
In this daily bar chart of YUM, below, we can see that traders got a dip in late September to go long. Our $85 stop was not elected but prices have not yet reached our $136 price target. YUM is trading above the rising 50-day moving average line and the rising 200-day average line.
The On-Balance-Volume (OBV) line has been moving higher from early July and its strength confirms and supports the price advance we have seen.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but has crossed to a take profit sell signal.
In this weekly Japanese candlestick chart of YUM, below, we see a positive picture. Prices are in a longer-term uptrend and are trading above the rising 40-week moving average line.
The weekly OBV line has been rising and shows only a minor dip in April. The MACD oscillator just turned upwards to a fresh outright buy signal.
In this daily Point and Figure chart of YUM, below, we can see that prices have reached and exceeded a Point and Figure target of $115.
In this weekly Point and Figure chart of YUM, below, we can see a potential upside price target in the $159 area.
Bottom line strategy: Traders should continue to hold longs from September but raise stop protection to $109 from a close below $85. The $136 area and then the $159 area are our price targets for now.
