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Why investors are about to get hungry for Yum

It was a mixed bucket of earnings for Yum Brands Tuesday.

The fast-food giant said it earned 87 cents per share, just shy of estimates at 88 cents per share. Revenue also fell short of expectations at $3.35 billion, compared with $3.4 billion. None-the-less, shares moved higher in after-hours trading.

The parent company to KFC, Taco Bell and Pizza Hut has been plagued in recent months by improper food handling scandals, which have caused a serious decline in same-store sales in China, and left a bad taste in investors' mouths. The stock is down 15 percent in the past three months alone.

(Read: Why investors are about to get hungry for Yum)

So, will the Yum Brands be able to turn a corner or is it dead money?

"I like [YUM Brands]," said Morningstar's senior restaurant analyst RJ Hottovy, who believes that the recent selloff in the stock presents an attractive buying opportunity.

"I think a lot of the negative news has already been priced into the stock—based on the food suppliers in China. Fundamentally I still think this is still a story that works. It is undervalued at current levels. We like it here."

(Watch: Yum's negative picture)

But there are two sides to every story, and according to Richard Ross of Auerbach Grayson, the technicals are setting up for sharp declines in the stock.

Ross pointed out two key technical levels for Yum Brands: short-term resistance and a long-term moving average.

On a short-term basis, Ross noted after a positive start to 2014, the stock took a turn for the worst. "We got a little bid at the end of the summer, as one can expect after an 18 percent decline, but you run into key resistance at $73 per share. We've now broken down below that area."

Perhaps what is even more troubling for Ross is the stock's key long-term moving average. "We've been above [the 150-week moving average] now for almost five years," Ross said.

"If we gap down below that key long-term moving average it will generate the first confirmed sell signal in quite some time and there could be significant downside from there. Watch that 150-week moving average, it's in serious jeopardy."

For the full discussion on Yum Brands with Hottovy and Ross, check out the video above.

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