Once again, I added more to my position in Carrols Restaurant Group, Inc. (TAST) at $6.90 now making Carrols my 2nd largest position.
The continued price drop is a great opportunity. The price drop is just making the company very cheap. At today’s price, the market is valuing the 1081 stores at only $287,122 each. To start a brand new store, you are typically looking at an initial investment of $1,200,000 to $2,800,000. These are mostly proven stores with excellent management in place.
The current price to book value is about half what it has averaged over the last 5-10 years. Carrols, is constantly increasing gross revenue and book value and future earnings potential while sacrificing short term net income, which I feel many investors are focusing too much on.
Adding the Popeye’s brand is also a great potential growth driver for the business especially with the popularity of the new new chicken sandwich. And Burger King’s Impossible Whopper seems to be doing quite well as well.
Some are thinking the economy is going negative. If that’s the case, people will still want to go out to eat. Carrols provides good food at great prices.
Here is my previous analysis: Carrols Restaurant Group, Inc. (TAST) – Buy
A portion of my position in Hanesbrands Inc. (HBI) and my entire positions in Live Current Media Inc. (LIVC), Micro Focus International plc (MFGP), DXC Technology Company (DXC), Toyota Motor Corporation (TM), L Brands, Inc (LB), (WAB), Hewlett Packard Enterprise Company (HPE), HP Inc. (HPQ), Perspecta Inc. (PRSP), General Electric Company (GE), Community Bank System, Inc. (CBU).
While many of these positions I felt comfortable existing, the main reason was to raise funds. I will most likely rebuild positions in Community Bank System, Inc. (CBU) and add back to Hanesbrands Inc. (HBI) at some point.
Once again, I added more to my positions today in Facebook Inc (FB) at $132.76 and Altria Group, Inc. (MO) at $48.79.
Facebook is now my 3rd largest holding and Altria is my 9th largest holding. Rankings for top holdings are located here.
I’m very bullish on Facebook at these prices. I’ve been waiting a long time for the opportunity to get shares this cheap. Trading at a PEG of only .6 and a forward PE of 18.01! I believe that Facebook is one of the greatest ways to grow a business now. My monthly expenditures on ads on Facebook and Instagram for my own and client’s businesses have continued to grow. Facebook and Google are the best opportunities for lead/sales generation. Increased privacy regulation will only make them stronger as smaller/new entrants will have difficulty keeping up just as tobacco legislation helped Altria remain dominant. I would continue to add to your position if it continues to go down. I’ve bought a few times so far and plan to add more making it one of my largest positions.
I agree with their strategy to pivot towards cannabis and vaping. I think this is very smart considering declining tobacco-based product sales. Their acquisition interests in JUUL and Cronos help with this concern and get them in to two high growth categories related to their market. Altria can use it’s vast distribution network and experience with government regulation to help expand vaping and cannabis products worldwide.
The increased debt to make the purchases is a bit concerning, but necessary to ensure the future of the company. Assuming they get a rate of around 4% on the loan and the cost reduction plan they mention in this release would cover the majority of the interest and a portion of the principal for JUUL. Cronos is relatively small in comparison.
The dividend yield is also great at 6.16%. I really nice income stock to have in your portfolio during a volatile market.
- PE of 8.7
- Price/Book of 5.9
- Dividend yield is 6.16%
The biggest threats I see to Altria are declining sales of tobacco and increased regulation. There will most likely be more regulation on vaping and as marijuana is legalized it will come come with a heavy load of regulation as well. Also, there is a current proposal to ban methanol. However, concerns over this seem to overblown. Also, Altria is experienced in dealing with government regulation. In fact, I believe government regulation is responsible for their success. The intense regulations of the tobacco industry ensured their dominance for many years and could do the same with vaping and marijuana. I would say that anyone interested in getting exposure to marijuana investing should definitely take a look at Altria to get the exposure with minimal risk.
Here is my previous analysis on all three:
Once again, I added more to my positions today in Facebook Inc (FB) at $144.41, Carrols Restaurant Group, Inc. (TAST) at $9.60, and Amazon.com, Inc. (AMZN) at $1587.31
The continued price drop in all three of these are a great opportunity. Retail sales are strong and Amazon and Facebook will benefit from this. Amazon with actual sales and advertising, and Facebook with advertising on Facebook itself and Instagram.
Amazon has been very aggressive with increasing it’s share of holiday sales and we are seeing that personally with our Wondermugs business. We have sold over twice as many mugs on Amazon this year compared to last year. With Facebook, we are personally spending significantly more this year on ads as well as for our clients of Advantage Creations.
With Carrol’s the price drop is just making the company very cheap. At today’s price, the market is valuing the 828 stores at only $729,773 each. To start a brand new store, you are typically looking at an initial investment of $1,200,000 to $2,800,000. These are mostly proven stores with excellent management in place.
Some are thinking the economy is going negative. If that’s the case, people still need to buy goods, will still use social media and go out to eat. Amazon and Carrols provide great prices on products. Facebook/ Instagram will still be used.
There are of course other pressures on these specific companies. Facebook with it’s privacy concerns, Amazon with other retailers getting more competitive and Microsoft with cloud services and Carrols with McDonalds, but I believe at these prices all of these concerns are priced in and then some.
Here is my previous analysis on all three:
Once again, I added more to my position today in Community Bancorp (CMTV) at $16.10.
Still my largest holding and a great opportunity.
Why Community Bancorp?
The stock has fluctuated a lot most likely due to overall market pressures and due to trading over the counter. However, the company is very stable, growing and is located in a market that has good loan growth potential.
Like Merchant’s Bank, it’s a smaller local bank that doesn’t engage in risky financial business. Since Community Bancorp is local and it’s market is more local/small business, it should be less impacted by national issues such as the trade war with China.
Update on Valuation
Community Bancorp currently trades at a:
- PE of 10.7
- Price/Book of 1.4
- Earnings Growth rate of 10.84%
- PEG of .99
- PEG payback in years is 7.22
- Dividend yield is 4.72% (based on most recent dividend payouts of .19).
One of the better dividend yields for the low risk nature of this business. It’s got a low book value and PEG, not as low as Capital One (another recent holding), but with a less risk in my opinion and the dividend is a big good selling point.
However, if it should have a significant increase from this point I will probably sell some if other opportunities arise as I have a larger percentage of my portfolio in this single company than I’m usually comfortable with.
However, I’m fairly comfortable parking a significant portion of my capital here while waiting for other opportunities to diversify.
See more comments on Community Bancorp here.