Diamonds and Dogs

10/11/16

Yum Brands (YUM) looks good. In a day when very few stocks are trading higher, Yum Brands is up a percent after the company announced plans for the spinoff of Yum! China to take place November 1, coinciding with a doubling in capital returns to shareholders of about $13.5 billion over the next three years. The CEO at Ritholtz Wealth Management believes Yum! China could potentially be a hot piece of paper. The money manager believes Yum brands stock will be a triple-digit number as the spinoff will create two management teams focused on a sole goal, to expand in China and expand business around the globe.

Illumina (ILMN) loses its luster, for now.  The global leader in DNA sequencing machines dropped 25% not far from its 52 week low after lowering guidance for the quarter.  The company on warned that revenue in the quarter will be $607 million, short of its earlier guidance of $625-$630 million. It also substantially lowered its fourth-quarter revenue forecast.  This marks the third time in the past four quarters Illumina has missed expectations of one sort or another, including an April 18 revenue warning that sent shares tumbling 20 percent. The string of bad headlines suggests Illumina's core business may be slowing as bull case for growth opportunities may not materialize.