Posts Tagged ‘IPOs’
How Peter Lynch Got It Right 20 Years Ago
By Mitchell Clark, B.Comm. for Profit Confidential
There’s always strength in numbers.
The equities market is definitely due for a prolonged break, but one subsector I always follow is restaurant stocks. These are key benchmark stocks, and the performance of these stocks offers up an unscientific survey on consumer spending and sentiment.
So many restaurant stocks experienced a breakout at the beginning of the year. Then they took a break and re-accelerated again.
If there is more confidence in the economic landscape, consumers spend money on eating out or ordering in food.
Restaurant stocks are a group where you can make good money as a stock market speculator. Peter Lynch (the famous manager of the Magellan Fund) always advocated for this sector, telling investors to look here for opportunities. He wrote a chapter on it in his book Beating the Street.
What Lynch advocated, and I agree with wholeheartedly, is that a successful restaurant company must have an experienced and capable management team, proper financing, and a deliberate and methodical approach to expanding the concept. He advocated that a company’s slow and steady business expansion is what wins the race at the end of the day.
The great thing about restaurant stocks is that they don’t have to have a brand-new concept to be successful.
Cracker Barrel Old Country Store, Inc. (NASDAQ/CBRL) is one of the many companies that have been hugely successful over the last few years.
Cracker Barrel has a price-to-earnings (P/E) ratio of approximately 18 and is yielding 2.3%. The position has doubled on the stock market since the fall of 2011.
The company’s revenues in its latest quarter grew 4.4% … Read More
New IPOs Hitting the Tech Sector; Microsoft and Intel Struggling
By Mitchell Clark, B.Comm. for Profit Confidential
The most important news to come will be in two technology stocks: Intel Corporation (NASDAQ/INTC) and Microsoft Corporation (NASDAQ/MSFT). What these two companies report in their earnings results will be very telling when it comes to the health of the personal computer (PC) market.
Both Intel and Microsoft are not expensively priced on the stock market at all. Intel, in particular, has a very fair valuation, and its dividend yield is well over four percent.
Of course, the key issue for both of these companies is growth. With the prevalence of tablets and all kinds of PC-derivative products, it is tough to imagine both these companies reporting strong growth in earnings.
Consensus earnings estimates for Microsoft are quite a bit stronger than they are for Intel.
With the stock market at its highs, all kinds of new initial public offerings (IPOs) have hit the market, and some are very interesting companies.
One small, but growing technology company out of Irwin, PA is The ExOne Company (NASDAQ/XONE), which is in the business of manufacturing three-dimensional (3D) printing machines. These machines help designers and engineers to produce industrial prototypes and production parts. The company sells to the aerospace, automotive, and heavy equipment markets.
ExOne is a company that’s still in its early stages. In its latest earnings report, 2012 fourth-quarter revenues grew to $12.7 million, up a substantial $10.0 million over the fourth quarter of 2011.
The company turned profitable in the latest quarter, with earnings of $0.9 million, up from a net loss of $2.8 million in the comparable quarter.
For 2012, total revenues were $28.7 million, representing growth of 88% … Read More
Apple Sees Significant Downturn; Can It Recover?
By Mitchell Clark, B.Comm. for Profit Confidential
Stock market action has been exceptionally strong since the beginning of the year, and Wall Street must be making a killing with so many new initial public offerings (IPOs).
The lack of consistency in economic news is a real problem. Wall Street has been upgrading many popular stock market brands. It really is cheerleading.
Companies like AOL Inc. (NYSE/AOL), The Gap, Inc. (NYSE/GAP), priceline.com Incorporated (NASDAQ/PCLN), Under Armour, Inc. (NYSE/UA), and even Yahoo! Inc. (NASDAQ/YHOO) got upgraded. Google Inc. (NASDAQ/GOOG) was just rated a “Buy” by UBS after the position jumped $100.00 a share on the stock market.
The proof will be in the pudding. With so many of the big names at all-time record highs on the stock market, they should correct when they report. If they don’t, I will be very surprised. (See “Breakouts All Around; Final Countdown or the Beginning of a New Cycle?”)
The one stock I don’t know what to do with is Apple Inc. (NASDAQ/AAPL). It’s like there is a tremendous groupthink on Wall Street with this position.
Did the company just price itself out of its own market? Is it the revolt taking place in Apple retail stores? Or is it just a unified Wall Street trade? I don’t know what to do with this company.
I don’t use an “iPhone,” but when I bought a “MacBook Pro,” I received good in-store service from a particular associate. When I decided to buy more RAM (random-access memory), I called the store and asked for the same guy. Then I got berated by this punk kid who said that they don’t do this, … Read More
Fast Food Breakout: New Names Crushing the Competition
By Mitchell Clark, B.Comm. for Profit Confidential
Restaurants are seeing a comeback. McDonalds Corporation (NYSE/MCD) was a stock market darling in 2010 and 2011. The company reported an improvement in global sales, but as things slowed in 2012, the position drifted. McDonalds has regained all its stock market weakness from last year, and it’s looking set to break its all-time record high. The company’s global comparable sales have been in decline during the first two months of this year, but earnings estimates have been ticking higher. McDonalds reports mid-April.
Comparatively, The Wendys Company (NYSE/WEN) has really struggled on the stock market since 2007. I like Wendys, but the company just hasn’t been able to get customers excited about its menu and the competition for value menus has been extremely fierce. Wendys’ earnings are all over the map.
Wendys has been trading between $4.00 and $6.00 a share for the last four years and just can’t seem to get any momentum in its operations or share price. Like everything though, the position moved significantly higher on the stock market since last November. It will be tough for Wendys to convincingly break above $6.00 a share. Wall Street has been nudging the company’s earnings estimates higher for this year and next, but realistically, it’s only expecting three percent sales growth.
Burger King Worldwide, Inc. (NYSE/BKW), however, has been doing really well since relisting on the stock market last year. This play isn’t so much about revenue growth; it’s more of an earnings story. Burger King’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
Cracker Barrel Old Country Store, Inc. (NASDAQ/CBRL) soared on the stock market after reporting excellent … Read More
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