Jamba GEARING UP FOR GROWTH

Jamba Juice

Jamba Juice (Photo credit: Wikipedia)

JMBA : NASDAQ : US$2.86
BUY 
Target: US$3.50

COMPANY DESCRIPTION:
Jamba owns the Jamba Juice brand and restaurant system, which through both company-owned and franchised stores is the largest retailer of smoothies in the US. The company also licenses its brand for development of consumer products and is expanding its franchise system internationally.

Investment recommendation


We maintain our BUY rating and continue to believe that Jamba has successfully developed the operating model for an efficient and profitable growth company.
Investment highlights
 JMBA reported EPS of $(0.09); we and the Street were at $(0.11). While the quarter was mixed vs. our forecast, the trends were generally favorable as a slightly softer comp was met with further profitability gains.
 Comps of -1.2% were pretty resilient when viewed against growth of 7.7% in the prior-year period. Comps through the first two months of Q1/13 are surprisingly strong, trending modestly positive against 12.7% growth in Q1/12.
 F2013 guidance is unchanged, as are our EPS forecasts on modestly higher revenue estimates given the stronger Q1 trends thus far.
Valuation
The shares trade at 11x F2013 forecasted EBITDA. We view the valuation as attractive given the quality of the brand. Our $3.50 12-month price target is increased from $3 reflects 10x our C2014 EBITDA forecast

McDonald’s Credit Suisse Upgrade

Bolivian McDonald's

Bolivian McDonald’s (Photo credit: lndhslf72)

MCD

NYSE : US$95.12

Credit Suisse raised their target price on McDonald’s as they believe MCD is well positioned to return to meaningful share gains in 2012, with upside to numbers if the macro environment stabilizes from a late January slowdown.

However, even if a slowing consumer environment limits absolute upside to numbers, relative outperformance on fundamentals combined with low relative valuation makes risk/reward attractive to the brokerage. The brokerage looks at drivers of 2006-11 share gains, and how they are set to reassert themselves in 2013. Credit Suisse believes that reestablishing a pricing gap, reemphasizing the dollar menu, and a much improved product pipeline (versus difficult competitor compares) can accelerate MCD share gains in 2013.

This analysis makes the brokerage comfortable with their above-consensus US comp estimates despite macro concerns. Credit Suisse already sees fewer risks to MCD’s estimates than to peers’, and a reacceleration in share gains could rapidly reverse valuation trends (relative to other burger quick service restaurants, MCD’s is near all-time lows.)

Any larger macro-driven “flight to stability” trade would only further benefit MCDs relative valuation/share performance, in the brokerage’s opinion.

McDonald’s Thankful GOP Millionaires To Battle Minimum Wage Hike

House Salad at Buffalo Wild Wings

House Salad at Buffalo Wild Wings (Photo credit: Tojosan)

MCD : NYSE :

US$94.00
You pay for what you get.

The world’s largest restaurant chain was the biggest hit to the Dow on Wednesday, after President Barack Obama announced a plan to raise the minimum wage. The blizzard that lashed the U.S. Northeast at the end of last week possibly hurting the company’s sales, and Buffalo Wild Wings’ (BWLD) report on Tuesday that same-store sales are declining this year, may also be affecting McDonald’s stock, but most analysts agreed Obama’s call to raise the federal minimum was the main driver.

Obama called for a federal minimum wage increase to $9 an hour, from $7.25; he also proposed tying the minimum wage to the cost of living. The current minimum wage has been in effect since 2009. McDonald’s and its franchisees don’t disclose what they pay their restaurant workers. Its franchisees, as well as other restaurant chains, such as Wendy’s (WEN) and Jack in the Box (JACK), spend money lobbying against minimum-wage increases.

McDonald’s, which has about 14,000 U.S. locations, has been vying with other eateries to lure cash-strapped Americans. Earlier this month, the chain reported that U.S. same-store sales gained 0.9% in January as it advertised its Dollar Menu and tested new items to help boost sales.

Wendy’s A Round of Frostys For Everyone!

Wendy's

Wendy’s (Photo credit: Wikipedia)

WEN : NASDAQ :

US$5.19

! Shares of Wendy’s got a lift after the company received a positive mention in Barron’s over the weekend.
The magazine notes that over the past several months, the restaurant has gone back to its roots, focusing on high-quality products and better marketing, as well as a remodeling of its stores. Wendy’s has launched 66 new restaurants and 48 renovations that have met with a positive response from customers. Sales in the newer-looking stores are up 25% since remodeling.

The company plans to remodel 200 stores this year, and open 120 new units. In 2015 it is targeting 1,300 new and remodeled outposts. From a valuation perspective, Barron’s pointed to its enterprise value of 8.4 times EBITDA as attractive given than competitors such as McDonald’s (MCD) and Yum! Brands (YUM) sport EV/EBITDA ratios of 10 or higher.

At 10
times 2014 estimated EBITDA, the magazine says Wendy’s would be worth $7.20, and the upside is complimented with a dividend yield north of 3%.

Tax Tactics To Avoid The Fiscal Cliff Impact On Your Wealth

Wynn Resorts

Wynn Resorts (Photo credit: Wikipedia)

Nov 19

Business owners and investors are rapidly maneuvering to shield themselves from the prospect of higher taxes next year, a strategy that is sending ripples across Wall Street and broad areas of the economy.

Take Steve Wynn, the casino magnate, who has been a vocal critic of higher tax rates. He and his fellow shareholders in Wynn Resorts, the company announced, will collect a special dividend of $750 million on Tuesday, a payout timed to take advantage of current rates. Experts estimated that taking the payout this year instead of next could save Mr. Wynn, who owns a sizable stake in the company, more than $20 million.

For the wealthy like Mr. Wynn, the overriding goal is to record as much of their future income this year as they can. This includes moves as diverse as sales of businesses, one-time dividends and the sale of stocks that have been big winners.

“In my 30 years in practice, I’ve never seen such a flood of desire and action to transfer a business and cash out,” said Kenneth K. Bezozo, a partner in New York with the law firm Haynes and Boone. “We’re seeing a watershed event.”

Whether small business owners or individuals saving for retirement, investors are being urged by their advisers to reconsider their holdings. Along the way, many are shedding the very investments that have been the most popular over the last year, contributing to recent sell-offs in formerly high-flying shares like Apple and Amazon.

Investors typically take profits in their own portfolio at year-end, but the selling appears to be more targeted this year. Stocks with large dividends, for instance, are seen as less attractive because of the perceived likelihood of a sharp increase in the tax rate on dividends.

Dyke Messinger is holding back on hiring for his business. (Chris Keane/The New York Times)All this is weighing on the broader financial markets, as worries mount about the economic drag from the combination of higher tax rates and reduced government spending set for January if President Obama and Senate Republicans cannot reach a budget compromise before then.

Fears about the fiscal impasse in Washington, along with anxiety about fading corporate profits and weakening economies abroad, have pushed the benchmark Standard & Poor’s 500-stock index down about 5 percent since the election. On Friday, major stock indexes had their best showing of the week after President Obama and Republican leaders signaled that a compromise was possible.

Even if many of the tax breaks scheduled to expire survive a new budget deal, some business owners and investors are bracing for substantial increases in specific areas of the tax code.

The top rate on dividends, for example, could climb to 39.6 percent from 15 percent if no action is taken. Capital gains taxes, which now top out at 15 percent, could rise above 20 percent, many financial advisers say. Most investment income will also be subject to a 3.8 percent charge to help pay for President Obama’s health care law.

Stocks that pay big dividends have been popular in recent years among investors eager for an alternative to the meager returns on bank savings accounts and Treasury securities. Since October, though, the two sectors that provide the most generous dividend payments — utilities and telecommunication stocks — have been among the worst performers, hurt also in part by the devastation of Hurricane Sandy on the East Coast. Utility companies in the S.& P. 500 have fallen 9.4 percent from their highs in October. Telecommunication stocks in the index have dropped 11.3 percent from theirs, compared with the broader index’s 6.8 percent decline from its recent high.

John Moorin, the founder of a medical equipment company near Indianapolis, said he sold about $650,000 in dividend-paying stocks like McDonald’s and Coca-Cola a few days after the election, worried about the potential increase in taxes.

“I love these companies, but I’m so scared that now all of the sudden I’m going to get taxed at such a rate with them that they won’t be worth anything,” Mr. Moorin said.

Although Mr. Wynn has declared special dividends at the end of the year before — most recently in 2011 — in a call with analysts last month, he hinted that higher taxes would cause him and other chief executives to rethink big payouts in future years.

In the meantime, he added, it was “very difficult to do long-range planning with a government that moves as much as this does on so many issues.”

Leggett & Platt, a diversified manufacturer based in Carthage, Mo., decided to move up payment of its fourth-quarter dividend to December from January so shareholders could take advantage of the lower rate.

“If we can help our shareholders avoid taxes and keep more of their dividends, we’ll do it,” said David M. DeSonier, senior vice president for corporate strategy and investor relations.

While negotiators are trying to find ways to raise more revenue for the long term, some experts expect a substantial bump in tax collections in the short term as investors take a multitude of steps now that they would have taken in future years. After the top tax rate on capital gains rose to 28 percent from 20 percent at the end of 1986, federal receipts from such gains doubled to $52.9 billion in 1987, as sales surged at the end of the previous tax year.

The potential jump in tax rates has been telegraphed for months, but many investors say they did not respond sooner because they were waiting to see if Mitt Romney would defeat the president and move forward with his commitment to keep rates at current levels. President Obama, since defeating Mr. Romney, has continued his call for an increase in marginal tax rates on the wealthy. A growing number of Republican leaders have conceded that some increase is now likely.

Kristina Collins, a chiropractor in McLean, Va., said she and her husband planned to closely monitor the business income from their joint practice to avoid crossing the income threshold for higher taxes outlined by President Obama on earnings above $200,000 for individuals and $250,000 for couples.

Ms. Collins said she felt torn by being near the cutoff line and disappointed that federal tax policy was providing a disincentive to keep expanding a business she founded in 1998.

“If we’re really close and it’s near the end-year, maybe we’ll just close down for a while and go on vacation,” she said.

Of the potential changes in the tax code set to take place on Jan. 1, the scheduled increase in the tax rate on capital gains would hit a particularly broad range of investments.

Business owners, for instance, can lock in the current top rate of 15 percent on capital gains if they sell their company before the end of the year. The capital gains tax also applies to increases in the value of stocks and other securities, encouraging some investors to sell holdings that have done well. This is one of several factors cited in the recent plunge in the price of Apple shares. They have dropped 26 percent since mid-September after rising 73 percent earlier in the year.

The coming changes have not hurt all assets. Municipal bonds have become more attractive because they are exempt from most federal taxes, including the new surcharge related to President Obama’s health care law. Frank Fantozzi, a financial planner in Cleveland, is recommending that his wealthy clients increase their allocation to municipal bonds from around 30 percent to about 40 percent.

But the potential effect of the scheduled tax increases and government spending cuts has been mostly negative. Many market strategists have suggested trimming overall holdings of risky assets like stocks, and business executives are proceeding very cautiously.

Some business owners say they are holding off on hiring plans because they expect tax rates to rise. Dyke Messinger, chief executive of Power Curbers in Salisbury, N.C., said he would like to fill four slots at his construction equipment company but would only hire three people because he anticipated that his tax bill would rise by $100,000.

“It’s not a huge amount of money,” Mr. Messinger said. “But it’s enough money that you don’t want to make a misstep.”

KFC vs. Popeyes

Popeyes Chicken & Biscuits biscuits

Popeyes Chicken & Biscuits biscuits (Photo credit: Wikipedia)

Oct 27

KFC Is Fighting To Stop Archrival

Popeyes From Buying Up Its

Bankrupt Restaurants

 

Popeyes is buying up 28 former KFC locations, mostly in the Minneapolis-St. Paul area

 

This all happened because the KFC franchisee went bankrupt, and there are 21 more restaurants that it has closed down. Popeyes is currently trying to get approval to purchase the rest.

Carol Tice at Forbes calls it “a move that sums up the ascendance of one surging brand and the decline of another.”

But KFC’s not going to lie down and get beaten by Popeyes. The statement the company gave Tice is evidence that it’s going to try to put up a fight:

KFC Corporation is intimately involved and intends to make every effort to see that as many restaurants as possible continue to operate as KFC restaurants with the same employee teams but under new ownership.”

Popeyes CEO Cheryl Bachelder made it abundantly clear in an interview with us in October that KFC’s not her prime concern. She wants to compete with the whole top five of the fast food segment, including McDonald’s and Wendy’s.

But, at their hearts, the bone-in chicken chains will always be archrivals, and Popeyes’ grab of all these dead KFCs has to be hitting a nerve.

McDonald’s Menu Forecasts :Shamrock Shakes and Fish Bites

English: The mdonalds logo from the late 90s

English: The mdonalds logo from the late 90s (Photo credit: Wikipedia)

 

Sept. 18

McDonald’s  (MCD : NYSE : US$92.14)

Good things come to those who wait in line

 

Hockey fans and connoisseurs of fine cuisine will have something in common this fall – they will both have to wait. Just days after the NHL lockout was announced, more sad news has hit the press.

According to a memo obtained by Ad Age from McDonald’s Operators National Advertising Fund (OPNAD), the McRib will not be available until the latter half of December. McRib fans originally expected to get their annual dose of the venerable sandwich in October, but “after looking at ways to strengthen the fourth-quarter 2012 OPNAD calendar,” McDonald’s decided to delay its marketing window until December.

The company is looking for a strong December to follow up the 9.8% sales increase of December 2011, when many restaurants benefitted due to a milder-than-expected winter. While the McRib will be relied on to help December sales and the fourth quarter in general, McDonald’s facing another steep challenge in February, which posted a solid 11.1% increase in sales this past year.  Ad Age sees Fish McBites as the hot new product for February

 

 

McDonald’s Rises On Value Menu

English: A Big Mac combo meal with French frie...

English: A Big Mac combo meal with French fries and Coca-Cola served at a McDonald’s in Louisvile, Kentucky. (Photo credit: Wikipedia)

Sept . 12

Disclosure : Yes that’s me every morning for coffee at MCDs

McDonald’s (MCD : NYSE : US$91.20),

S&P 500? I’m lagging it.

 The real burger king said same-store sales rose 3.7% in August, as the fast-food chain emphasized the  value of its menu offerings amid the challenging global economy. McDonald’s strongest performance came from the region encompassing Asia, the Middle East and Africa, with revenue at stores open at least 13 months up 5.7%.

The company said the increase in that region was fuelled by a shift in the timing of Ramadan, which ran from late July to mid-August this year. It had fallen entirely in August last year. In Europe, which is McDonald’s biggest market and accounts for 40% of its business, the figure rose 3.1% on strength in the U.K., France and Russia. The company said its sponsorship of the London Olympics helped  results.

Another strong contributor was its Coca-Cola (KOglass promotion, in which customers got a free glass and wristband when they bought an extra value meal or premium salad.

Analysts caution, however, that despite being off about 8% for the year-to-date and lagging the S&P 500 by more than 20 percentage points, McDonald’s still looks too pricey. Shares currently sport a forward P/E of 15.4, up from 14.4 a month ago. That’s currently in line with the stock’s own five-year average, despite entering a period of what looks to be slower earnings growth.

 

 

 

 

Starbucks Bucks Recession Wiith Expansion

Starbucks Chairman Howard Shultz talks to the ...

Starbucks Chairman Howard Shultz talks to the media at the Vancouver Waterfront Station location, celebrating 20 years of Starbucks in British Columbia. (Photo credit: Wikipedia)

July 16

Starbucks (SBUX : NASDAQ : US$53.60),

Frappucinos to rescue  the U.S. job market? 

Starbucks on broke ground on a $172 million manufacturing plant in Georgia on Friday that will create more than 140 jobs in the state. The Seattle coffee chain announced in March that the facility will make Via instant coffee and ingredients for Frappucinos sold in Starbucks outlets and in grocery stores, taking over operations handled by third-party plants in Latin America. Starbucks is working to broaden its business as it faces growing competition from rivals like McDonald’s (MCD) and Dunkin’ Brands (DNKN).

 Last month, Starbucks said that it plans to open its first Tazo tea shop this fall in another move to expand beyond its namesake coffee shops and earlier this year said it will open its first Evolution Fresh juice store.

About 75% of the Georgia plant’s workers will be maintenance and engineering technicians,roasting operators, packaging operators and others. The remaining 25% of the workforce will include management and administrative staff. Aside from 140 manufacturing plant jobs, the project will means jobs in construction and shipping.

 Starbucks said the Georgia plant will be its fifth U.S. manufacturing facility and should be completed by early 2014.

 

 

McDonald’ vs Wendy’s – Profits Are On A Diet

Wendy's

McDonalds
McDonalds (Photo credit: Sean MacEntee)

 

May 8

McDonald’s (MCD : NYSE : US$93.60)

 

McDonald’s April sales fell short of expectations, as weak performances in the U.S. and Asia weighed on results. Same-restaurant sales in the U.S. rose by 3.3% while analysts were expecting a 5.0% increase and in Asia, a 1.1% increase in sales missed estimates, hurt by a drop in sales in Japan. Europe was a bright spot in April, as sales increased by 3.5% versus the consensus estimate of a 3.0% increase, overcoming debt concerns, austerity measures and high unemployment.

Overall, global sales increased by 3.3% while analysts were looking for 4.0%. One analyst said that the struggles in the U.S.  may have stemmed from McDonald’s emphasizing more expensive menu items, such as 20-piece Chicken McNuggets (better known as a light snack at the Morning Coffee), while many are still keeping a cautious eye on their spending. The analyst went on to say that Wall Street may have set the bar too high given McDonald’s strong sales in recent months.

Commenting on his company’s results, CEO Jim Skinner said, “Our focus on delivering great tasting food and an exceptional restaurant experience generated positive global comparable sales results in April. Amidst a challenging global economic environment, McDonald’s ongoing commitment to optimizing the menu, modernizing the restaurant experience and broadening accessibility will enable us to continue to satisfy the evolving needs of our customers.”

Compare and contrast in a 500 word essay.

Wendy’s Company (WEN : NASDAQ : US$4.69)

Wendy’s reported a first-quarter profit that missed Wall Street expectations and cut its forecast for the year, as the fastfood chain struggled in its revival efforts amid higher costs for fresh beef and weaker-than-expected sales. The company noted this year as a “transition year,” with a new management team focused on modernizing restaurants and introducing menu items that will lay the groundwork for future growth.

It said margin at its company-run restaurants slipped as a result of higher costs for ingredients, particularly for fresh beef. Despite higher commodity costs, Q1 net income was $12.4 million, or $0.03 per share, compared with a loss of $1.4 million, or breakeven per share, last year. Revenue rose about 2% to $593.2 million, short of Wall Street’s $608.1 million estimate, and same-store sales at established Wendy’s North America company-operated restaurants rose 0.8%.

Excluding items, the company earned $0.01 per share, short of analysts’ estimates of $0.03. Wendy’s lowered its expectations for adjusted earnings from continuing operations to be in a range of $320-335 million from its previous forecast of $335-345 million.

 

Where are you taking your portfolio for Mother’s Day ?

 

 

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