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Three Trades for a North Korea Breakthrough

A potential 'opening up' of North Korea could be a needle mover for these names.
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As the United States and North Korea head into the summit in Singapore I got to thinking about what U.S. companies could benefit from a potential opening up of North Korea.

We have already heard Kim Jung-un say he wants to get a McDonald's (MCD) in his country. That would be a small win for the Golden Arches. A more interesting candidate, however, is Yum China Holdings (YUMC) , the spinoff of Yum! Brands' (YUM) operations in Asia.

A few things to think about. Fried chicken is extremely popular in South Korea. KFC is huge there. If the North Korea is opened up, KFC will take over North Korea much the way it has South Korea. In reviewing options on YUMC I like the July 42.50 calls which cost about a dollar. There is real value in those calls.

Another name that could be interesting is PepsiCo (PEP) . While not as world famous as Coca-Cola (KO) , Pepsi products are what they serve in KFC, Taco Bell, and Pizza Hut. That's a good thing. Again, opening up the North could be extremely good for Pepsi's growth prospects as it might have an inside line on name recognition.

While Action Alerts PLUS holding PEP stock has had a really rough go, it's now back above is 50-day moving average and appears to be on the upswing. This is another one with overly cheap options. I can buy the August 105 calls for a little over $2.00 a pop. If it makes a run to the 200-day MA of $112, those calls could be really nice.

Finally, take a look at (XLE) , the Energy Select Sector SPDR ETF. North Korea's energy infrastructure is a mess from the Stone Age. I think we could see names such as BP plc (BP) , ExxonMobil (XOM) and a whole host of others move in to modernize that nation.

I already like energy as it looks like oil is going to stay higher for the next few years. Adding a new client is a big win to whomever gets in there.

While in the end a North Korea-U.S. deal would not be a significant event for most major U.S. corporations, it could move the needle on a few specific names.

At the time of publication, Sebastian had no positions in the securities mentioned.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long PEP.