Tag Archives: consumer-goods

Altria’s Perverse Regulation

Altria and investing in regulated industries. How tobacco regulation protects big tobacco. CrossFit vs. Washington DC. Rangeley Capital’s portfolio managers host a fifteen-minute podcast. If you missed the previous episode, then please check out A 105% Dividend? . We discussed Winthrop Realty (NYSE: FUR ). The end of Winthrop is near, but not before you could get a safe, quick return of your capital with a healthy return. We also talk about the article Sen. Bob Corker Profits on Quick Stock Trades . In this episode we talk about the challenges of investing in companies such as Altria (NYSE: MO ) that compete in highly regulated industries. We also discuss Anti-Licensing Movement Scores a Victory . Crossfit is joining Uber, Airbnb, and the other disruptive entrants that are fighting back against entrenched incumbents and their regulatory henchmen. The podcast is hosted by Andrew Walker and Chris DeMuth Jr, two Rangeley Capital portfolio managers. You can follow us on Twitter (NYSE: TWTR ) ( Andrew and Chris ). You can subscribe to the podcast on iTunes here or on Soundcloud here .

Did Restaurant Earnings Impact This New ETF?

With the introduction of the new Restaurant ETF (NASDAQ: BITE ) at the end of last month, time has come to evaluate the impact of the recent spate of restaurant industry earnings on it. Most of the restaurant stocks delivered better-than-expected earnings and rising same-store sales (comps) in the last reported quarter. The upbeat results definitely speak about the strong fundamentals of the industry. Low fuel cost, an improving U.S. economy, rising consumer confidence, higher consumer spending and better job prospects all bode well for the restaurant industry. Let us take a quick glance at some of these results. Restaurant Earnings in Detail McDonald’s Corporation (NYSE: MCD ) posted earnings per share of $1.40 for the third quarter that beat the Zacks Consensus Estimate of $1.27 by 10%. Earnings, in constant currencies, grew 44% year over year driven by decline in total costs and expenses and a lower share count. Revenues of $6.62 billion declined 5% year over year due to currency headwinds but grew 7% in constant currencies, beating the Zacks Consensus Estimate by 2.7%. This was driven by comps growth at all its segments. The maker of hamburgers and fries expects comps to grow in the fourth quarter as well. Starbucks Corporation’s (NASDAQ: SBUX ) adjusted earnings of 43 cents per share in the fourth quarter of fiscal 2015 missed the Zacks Consensus Estimate of 44 cents by 2.3%. However, earnings were on the higher end of management’s guided range and grew 16% year over year as solid top-line growth offset lower margins. Sales rose 18% to $4.91 billion, outpacing the Zacks Consensus Estimate of $4.89 billion by 0.5% driven by robust comps. Global comps growth of 8% was higher than a 7% rise in the previous quarter, driven by increased traffic trends. The company expects revenues to grow more than 10% in fiscal 2016, excluding the extra 53rd week. Comps are expected to grow somewhat above the mid-single-digit range. Buffalo Wild Wings Inc.’s (NASDAQ: BWLD ) third-quarter results were disappointing. The restaurant operator’s adjusted earnings of $1.00 per share fell 12.2% year over year and were short of the Zacks Consensus Estimate of $1.28 by 22% owing to higher food and labor costs. Despite a 22% increase, the company’s revenues of $455.5 million missed the consensus estimate by roughly 1.8%. It also expects single-digit net earnings growth for 2015 compared with 13% growth expected previously. The Wendy’s Company’s (NASDAQ: WEN ) adjusted earnings came in at 9 cents per share, exceeding the Zacks Consensus Estimate by 12.5% and year-ago earnings by 28.6% driven by lower expenses and improved margins. Total revenue of $464.6 million beat the consensus mark of $442.0 million by 5% but declined 6.5% from the prior year. The company marginally revised its earnings, EBITDA and comps guidance for 2015 on the basis of strong year-to-date operating results and encouraging response to the 4 for $4 promotion that began in October. ETF Impact Strong results notwithstanding, the performance of restaurant stocks has not been commensurate due to several headwinds like the threat of higher labor costs due to demand for rising minimum wages, price wars, strong currency and a slowdown in the Chinese economy. This found a reflection in the performance of BITE, which exclusively focuses on this industry. The fund has tumbled 5.8% since its launch (as of November 12, 2015). Except McDonald’s and Starbucks, nearly all the stocks in the fund’s top 10 holdings nosedived in the past one month. Investors, therefore, should exercise caution before hopping into this niche ETF and closely monitor its price movements in the coming days. Let us take a look at this ETF in greater detail. BITE tracks the BITE Index, which is an equal-weighted index comprising 45 publicly-traded companies in the U.S. The fund’s holdings include some of the renowned companies in the restaurant industry that operates a broad variety of restaurant formats raging from quick serve and fast casual to casual dining and fine dining. The fund’s top five holdings include McDonald’s, Starbucks, Carrols Restaurant Group Inc. (NASDAQ: TAST ), Chuy’s Holdings, Inc. (NASDAQ: CHUY ) and Ruth’s Hospitality Group Inc. (NASDAQ: RUTH ). Together, the top 10 holdings occupy 27.6% of the fund’s assets. BITE has net assets worth $2.4 million and is thinly traded with an average volume of around 5,000 shares per day. The fund is a bit expensive with 0.75% in expense ratio. Original Post

Time Your Buys Like A Pro

By Jonathan Rodriguez For traditional buy-and-hold investors, market timing probably doesn’t mean much. But here’s the thing: It should. Believe it or not, many smart people are investing the wrong way every single day. These investors see a stock on the rise and chase shares when everyone else is buying – and that means they’re often buying too high. And then, when the market sells off, they dump shares along with everyone else – often at too low a price. Professional traders know this and mint fortunes off the herd. But by using one simple indicator, you can time your entries alongside the elite traders. Once you’ve identified a quality stock, the first step is to buy shares at the lowest price you can. You see, stocks never go up or down in a straight line. When a stock trends upward, it ascends the chart in waves. Shares rally under momentum and fall on profit taking. In order to buy the dips and sell the rallies, I use one of my favorite technical indicators: Bollinger Bands. Developed by John Bollinger in the 1980s, Bollinger Bands are volatility bands placed above and below a stock’s moving average. The bands’ values are based on standard deviations from the moving average. You can select any moving average and deviation, but traders typically use the 20-day moving average (DMA) and set the Bollinger Bands at two standard deviations above and below the DMA. I love Bollinger Bands because they combine several technical tools into an easy-to-use trend indicator. And because the bands utilize standard deviations, they adjust automatically for rapid changes in volatility. Once the bands are set, price action bounces between the upper and lower band as momentum swings. The idea is to buy shares as they “tag” the lower band and sell as they tag the upper band. Let’s look at an applied example. Here’s a one-year chart of Under Armour Inc. (NYSE: UA ), one of 2015’s hottest stocks. Over the last year, shares have outperformed the S&P 500 by more than 60%. As you can see, price action is contained between the Bollinger Bands. And by timing your entry on a dip to the lower band, you can increase your profits by several percentage points. On the chart, you’ll notice three distinct buy signals: December 2014-January 2015, May-June 2015, and August 2015. After executing a buy, you can sell on the upper band tag or hold until you’ve hit your profit target. Now, on a pricier large-cap stock, a few percentage points in profit might not mean much. But if you’re an options trader or short-term trader, those points can be the difference between small gains and big money. And the bands become even more valuable when trading volatile small-cap and mid-cap stocks. Bottom line: Don’t chase red-hot stocks at recent highs. Use Bollinger Bands to time the dips and get more bang for your buck. Original Post