Long: Investing in restaurant stocks - where we are, where we might be going.
I've noticed that several restaurant stocks mentioned here have done very well lately, and in general, the sector seems to be up.
There are several questions that I have:
Will those restaurant stocks that have been performing well continue to perform well?
Will those restaurant stocks that have under-performed get an upward re-evaluation --dragged up by the sector that apparently now is in investors' favor?
Are the valuations sustainable or will restaurant stocks (-g-especially the ones I own or will buy) come down once again?
Perhaps these questions are unanswerable with any accuracy. We know how to evaluate restaurant stocks -some key metrics are comparable store sales, p/e compared to growth, per-unit ROI, capacity increases, and so on. (Not that this information is easily available.) The stocks of the good companies maybe are already near highs, so their good future may already be reflected in their stocks' prices.
Following are what I believe thread posters here have bought and may still own. (I may have old data, I may have forgot somebody, I may be wrong in other ways. I'm just trying to get an overall picture since we've got value investors who have bought value stocks. I'm not trying to intentionally exclude anybody or judge anybody or hold anybody accountable for what they may or may not have said or done 0-2 year's ago.)
APPB: Grommit, Paul Senior
BOBE: Grommit
CAKE: Steven J. Emmerich
DRI: Grommit
IHP: Grommit
JBX: Grommit, David Stern, rhess, Paul Senior
KKD: (lol! Nobody here on the value thread better admit to this one!!)
LNY: Paul Senior
MAIN: RJM
OSI: Grommit
PZZI: Craig Bartels
STAR: Dale Baker
STRZ: RJM
WEN: Brendan Watt
YUM: Brendan Watt
Now I am going to classify a stock arbitrarily as either
being very close to its high (in its SI-reported 52-week range)
close to its low, or
within range/indeterminable/other
(aside: other people will likely have different ideas or criteria as to what constitutes "very close to its high" or "close to its low".)
I find 11 of 14 stocks at or near highs, two in midrange (PZXI & JBX) and only one (STRZ) near lows. (Krispy Kreme, the 15th stock, being my attempt at humor.)
I suspect that almost all thread posters above prefer to buy low and sell high, so I am assuming most of these folks have done very well with their restaurant investments. (Aside: I included a Dale Baker pick here. It was mentioned on his thread, not here. Imo, Dale sometimes is more willing to buy a stock as it's breaking to highs than some of the other posters mentioned above. That's only imo, from my casual observation.)
I've taken the restaurant stocks mentioned by Francois Tremblay on another SI thread and created the following portfolio:
siliconinvestor.com
Dang. Changing from an SI watch list to an SI portfolio eliminates the yearly highs and lows! And I can't get back to my watch list. Very sorry!!
Of the 85 stocks on my list, I characterize 34 as being neither near their highs nor at their lows (for that SI 52-week range). I characterize 14 that are near their yearly lows. And there are 37 stocks near their annual high.
37/85 = about 43% of the stocks in the restaurant sector are at their highs vs. about 14/85 = 16% at their lows. To me that does give some indication of how in-favor this sector is. Roughly speaking, if somebody randomly chose a stock in the sector within the last 52 weeks, the chances are about 43% that the stock would now be at its high. My agglomerating the posters' picks here show that the thread's posters picked 11 highs of 14 selections or 78%. We could have expected 6 out of 14 (ie. 43%) on average; the guys here got eleven or five more than would be expected. I conclude there was good stock picking on a sector where the opportunities were rife and sweet. (Easy to say now. -g-).
Lot of very dinky restaurant stocks in the 85 list. Maybe if I looked at the stocks and the picks and the record by just large capitalization stocks (size), I might find the number of highs and lows comparatively different. Thread posters here seemed to have a propensity for picking large caps. Perhaps for a margin of safety. (?)
From now, whereto?
For me, given that I prefer to buy 'em when they're low, and the ones that are up look too expensive for me, I'll hold the restaurant stocks I've got but look now at the 14 restaurant stocks that seem to be at their lows. Being quite aware that if a stock in a hot or up sector hasn't moved, there could be very, very good reasons why investors are shunning it. And if it ain't up now in a favorable market for restaurant stocks, it may be a long, long time (if ever) before it moves up.
Here's my list of 14:
finance.yahoo.com
bon appetit!
Paul Senior |
