Monday Mashup: SBUX, LOCO and More

Investment Ideas

The table below lists our Investment Ideas as well as our Bench -- a list of potential ideas we are watching closely.  We intend to update this table regularly and will provide detail on any material changes.

 

Monday Mashup: SBUX, LOCO and More - 11

Notable Callouts

  • We removed short BNNY from our Investment Ideas list after the GIS bid.
  • Our short call on SBUX was featured in Barron's this weekend in a column titled "The Problem With Starbucks."
  • We are hosting a Best Idea call this Thursday, September 18, 2014 at 11am EST to run through our short thesis on SBUX and field questions.

Recent Notes

09/08/14 Monday Mashup: BLMN, PLKI and More

09/11/14 New Best Idea: Short SBUX

Events This Week

Monday, September 15th

  • YUM Investor & Analyst Conference Day 1

Tuesday, September 16th

  • YUM Investor & Analyst Conference Day 2

Wednesday, September 17th

  • DNKN Investor & Analyst Day
  • CBRL earnings call 11:00am EST

Chart of the Day

Coffee prices are up +52.5% YTD and +39.5% YoY.

 

Monday Mashup: SBUX, LOCO and More - chart2

Recent News Flow

Monday, September 8th

  • BAGL appointed Frank G. Paci as President and Chief Executive Officer.  Interim CEO Michael Arthur will continue to serve on the company's Board of Directors.  Mr. Paci most recently served as President and CEO at McAlister's Deli and has held prior roles at The Pantry, Pizza Hut and Burger King.
  • RRGB announced it will open its newest restaurant in New York state (Horseheads, NY)  on September 22nd.

Tuesday, September 9th

  • DIN introduced its new "Waffullicious Waffles" which will be available for a limited time.
  • MCD reported disappointing August comps as global same-store sales fell -3.7%, led by -4% and -14.3% declines in the U.S. and APMEA regions, respectively.
  • BJRI increased its existing unsecured revolving line of credit to $150 million from $75 million and announced the opening of its newest restaurant in Denton, TX.
  • KKD announced a greater Maryland and Washington DC area development agreement with Monument Restaurant VII for the development of 20 new Krispy Kreme shops over the next several years.

Wednesday, September 10th

  • YUM increased its quarterly dividend by 10.8% to $0.41.

Friday, September 12th

  • DRI Starboard released its transformation plan for Darden Restaurants in a 294 page slide deck.  If enacted, the activist believes its plan could unlock $19-38/sh in value.  This excludes the potential value that could be unlocked through an Olive Garden turnaround.
  • SBUX 6.2 million share block trade was priced at $75.15 through BoA.
  • LOCO celebrated the grand opening of its newest restaurant in Sacramento, CA.

Sector Performance

The SPX (-1.1%) outperformed the XLY (-1.3%) last week.  In aggregate, casual dining and quick service stocks outperformed the SPX.

 

Monday Mashup: SBUX, LOCO and More - chart3

Monday Mashup: SBUX, LOCO and More - chart4

XLY Quantitative Setup

From a quantitative perspective, the sector remains bullish on an intermediate-term TREND duration.

 

Monday Mashup: SBUX, LOCO and More - chart5

Casual Dining Restaurants

Monday Mashup: SBUX, LOCO and More - chart6

Monday Mashup: SBUX, LOCO and More - chart7

Quick Service Restaurants

Monday Mashup: SBUX, LOCO and More - chart8

Monday Mashup: SBUX, LOCO and More - chart9

 

Howard Penney

Managing Director

 

Fred Masotta

Analyst


Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more