I haven’t written about Yiannis Mostrous in a while, but his latest ad that teases a hot investment that he calls “The Next McDonald’s” definitely got my attention. It’s a big promise, after all:

“Thousands of investors became millionaires and lived their dreams as 100 shares of McDonald’s split 12 times and turned into a 74,360 shares! But this growth stock will be even BIGGER than McDonald’s…”

So … all you need to do to find out about this stock, which he calls his “Top-Secret New Stock Recommendation” is sign on the dotted line for a $399 subscription to his Silk Road Investor. Or, of course, you could just keep reading, we’ve got a wheelbarrow full of clues and I’m sure your friendly neighborhood Stock Gumshoe can get to the bottom of this one.

Here’s how he teases his top-secret idea:

“My Top-Secret New Stock Recommendation

“McDonald’s is the first name that comes to your mind when someone asks about fast-food restaurant. However, if you ask the same question in the Philippines, the answer that you’ll get will be very different.

“My top-secret new stock recommendation may not be a household name when it comes to the global market yet. But in the Philippines, it’s the undisputed king of the burger market.

“The rivalry between my top-secret new stock recommendation and McDonald’s looks like no contest at first glance. McDonald’s has more than 31,000 outlets in more than 100 countries, out of which 3,000 outlets are in Asia. My top-secret new stock recommendation has only 600 outlets and over 50 international outlets.

“But in the Philippines, my top-secret new stock recommendation has humbled the global giant. This future darling of emerging market hedge funds and mutual funds has captured more than 75% share of the hamburger market in the Philippines. This is more than half of the fast-food market as a whole and about twice McDonald’s sales in the country. Its revenues are growing rapidly and profitably.

“Bottom Line: My top-secret new stock recommendation is the undisputed king of the fast-food market in the Philippines.”

Well, for anyone willing to do a little sniffing around that probably is plenty of information — there is only one Philippines, of course, and there can’t be more than one company that dominates the hamburger market there. But still, let’s consider the other clues before we toss the answer out there …

“Their secret is Smart Niching, or concentrating on serving the unique tastes of Filipino consumers, whereas McDonald’s exports largely standardized fare to consumers around the world. Their menu and flavors are specially suited to Filipino tastes. The local chain cooks up sweet, spicy burgers and serves seasoned chicken and spaghetti with sweet sauce, the way Filipinos like it….

“Their mascot with orange jacket and the blonde spaghetti-haired girl are better known and loved in the Philippines than Ronald McDonald….

“In the Philippines, and even in some key neighborhood markets in Southern California, my top-secret new stock recommendation has taken over the reign of McDonald’s. Sales and revenues have exploded in the past 24 months.

“Tailoring the menu to local taste buds in the Philippines, China, the United States and other key markets around the world is driving astronomical sales and profits.”

OK, so that’s far more than enough in the way of clues, though a few of his numbers are out of date. We don’t even have to get the Thinkolator up to cruising speed to tell you that this “top-secret” stock is:

Jollibee Foods (JBFCF on the pink sheets, where volume has skyrocketed today as this teaser takes hold … the home trading is on the Philippine Stock Exchange at JFC, but I don’t think most folks can trade there very easily). At the last price of 57 Philippine Pesos, the fair price in dollars would be roughly $1.28, and as is fairly typical the pink sheets shares trade at a small premium to that, they last traded at $1.30 as I type this. You can see the free trend analysis of JBFCF here from MarketClub, one of my sponsors … note that it’s based on the pink sheets chart, so it’s in a stronger uptrend than you would see on the price in their home market.

The company is pretty big and the stock trades actively in the Philippines, but if you’re interested in this one do be careful, trading on the pink sheets is very light and the price could easily get out of whack with the “real value” on the Philippine Exchange. The teaser has been running since April 24, it appears, and other than a brief psychotic break when it spiked to $1.40 and back down the other day it doesn’t look like the ads have driven the stock too crazy, despite the increase in pink sheets volume.

The basic info on Jollibee is available from the Philippine exchange site here, or from the company’s own investor relations site here.

They are the biggest fast food company in the Philippines, and a fairly large company by Filipino standards in general, they have been around since the mid-1970s, when the first restaurants were built up by an ice cream parlor owner to compete with the then-encroaching McDonald’s. Their core brand is the Jollibees restaurant, which serves hamburgers, chicken and spaghetti, among other things, and they also own the popular Chinese food chain Chowking and the pizza chain Greenwich Pizza, Red Ribbon Bake Shops and a few other restaurants, and they have several Chinese brands that they’re also actively expanding in that country (mostly Yonghe King and Hongzhuangyuan).

Jollibee has also been expanding internationally for decades, though quite slowly — they started out serving expatriate Filipino communities in Taiwan and the Middle East, and have gradually been building those up, with more focus recently on building a strong presence in China. The growth has been strong for a long time for Jollibee and their various brands, largely due to pretty aggressive expansion of their store footprint almost every year, an expansion that continues. They did close down one Chinese franchise operation last year and one brand, resulting in closing about 90 stores, but they also opened 168 new stores — the Jollibee brand itself does have in the neighborhood of 600 restaurants, and 50 foreign restaurants, as teased (it’s actually 686 and 57 as of the end of 2009), but if you add in all their other brands it’s more like 1,700+ restaurants, both franchised and company owned, around the world (the two Chinese brands are largely in China, but the rest are, like Jollibee, overwhelmingly Philippines-based).

The stock is not terribly well known, I guess, but it’s still a big company and one of the biggest brands in the Philippines, and it’s not exactly dirt cheap — Mostrous makes a point of calling this a growth stock, and that’s certainly how you’d have to think about it to buy shares. The last price was 57 Pesos, and each Philippine peso is about 2.25 cents US, and there are just over a billion shares outstanding — so the market cap is about $1.3 billion if I did my math correctly. Sales were 48 billion (Pesos) last year and net income was 2.7 billion, so the profit margin (5.6%) is a lot lower than big global brands like Yum or McDonald’s (10% and 20%, respectively), but they also have a lot of company-owned stores that bring that number down, and they’re operating a lot of their stores at the fairly low end in a very poor country. The margin was helped last year by cutting costs and lower taxes, and hurt by soft sales in some areas, including the US, where they have a few outlets, and by their store closures. The per share number is 2.61 pesos in net income, a 15% increase over last year — so there is growth, even in a relatively challenging year, and the trailing PE ratio comes in at about 22.

Like I said, not terribly cheap, but profitable, growing, and well-managed, as far as I can tell, with some strong local brands and a big effort to expand in China and the Middle East (the latter largely because that’s where there are a lot of Filipinos working), so perhaps worth a closer look if you’re interested. Do note that the stock is up substantially over the past year or so, and the US pink sheet shares are up even more thanks to some significant appreciation in the Philippine Peso. Because the vast majority of their business is in the Philippines you are effectively taking a significant currency position if you buy these shares — which could work for you, as it would have recently, or against you if the Philippine economy or currency takes a broader hit at some point (or the dollar climbs significantly).

I can’t say that I’ve ever been to a Jollibee, but the stock looks a bit tempting — I profiled the somewhat similar Brazil Fast Foods for the Irregulars back in March, and the idea of investing in something similar to the 1960s McDonald’s in countries that have some similarities with the 1960s US in terms of economic potential is certainly intriguing. There’s risk, of course, but there’s also some real growth potential — let us know what you think with a comment below.

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