Friday, March 27, 2015

Interesting investing-related observations I made during a short trip to the Dominican Republic

I don't know if this comes with the territory of being an investing fanatic, but it doesn't matter where I go or the reasoning for my trip- I am constantly making observations regarding possible investments and/or the presence of U.S companies abroad. I recently spent four days in the Dominican Republic for a friend's wedding and did not miss a chance to keep my eyes open. I had the privilege of staying at two different resorts: Barcelo Dominican Beach and Now Larimar (the latter being the best one by far!).

Here are some of the things I noticed which I feel were quite interesting:

1. Delta (DAL) airlines now serves Starbucks coffee (SBUX) (what happened do Dunkin Donuts?): I cant remember the last time I flew Delta and this may or may not be old news but last time I checked, Dunkin Donuts (DNKN) was the 'dominant player' in terms of coffee being served in airplanes. As a Starbucks shareholder, I was pleasantly surprised when the flight attendant handed me a cup with the Starbucks logo on it. I wonder how long this contract has been going on.

2. Delta employees remain fairly happy despite the changes in employee benefits: I traveled with a Delta employee whom happens to be friends with the bride. We spoke a bit about her role at Delta and how she feels about the changes that were made in terms of whom can take advantage of her employee perks. Although she showed a bit of disappointment with the fact that she can no longer offer benefits to her close friends, etc. She seemed very excited that her entire family (kids, parents, husband) can pretty much travel for free anywhere around the world (they just pay the taxes).

She also pointed out that Delta employees only have to work a minimum of 20 hours per week to get such perks which I feel is pretty cool. Anyways, the point of this observation is the fact that is always good to notice that company employees are happy and satisfied with their compensation. A company with disgruntled employees who feel are compensated unfairly is probably not going to go very far. So, it was nice to see that Delta is doing a good job with its people. Hey Delta, are you hiring? ;)

3. Dominican Republic tourism is booming. So get this-- each person that gets off an international flight in DR needs to pay $10 for a "tourist visa" regardless of the length or reason for the stay. This so called 'visa' is nothing but a very thin piece of paper (see below) that only stays in your hand for about 20 minutes until you cross the customs line.

The $10 fee needs to get paid each time you visit the country (is not something you keep and reuse). I did a little research regarding the amount of tourists entering the Dominican Republic each year. According to this site about 4.7 million tourists visited in 2013. At $10 per "visa" that's $47,000,000 per year and that doesn't even include how much the visitors payed to stay at their respective resorts. Looks like the D.R has been gaining a strong reputation for the best quality vacation for your money, and I don't see any signs of this slowing down anytime soon. Speaking from personal experience, Its the best time I've had at a resort in a very long time. Top quality food and drinks all inclusive. Not to mention the gorgeous weather. I cant wait to go back.

I made a note to myself to research companies that benefit from this booming in D.R tourism. If you have any ideas on this please email me or comment below. However, I'll make sure to share any research with you all.

4. Coca Cola (KO) remains the dominant soft drink everywhere, including resorts abroad. Our fridge was well stocked with some coke products. My time was spent at two different resorts and both had coke products. No signs of Pepsi anywhere.

From what I can remember, the prevalence of Pepsi soft drinks has never been really strong in DR. I would say Pepsi's presence is stronger when it comes to their snack products (chips, etc.).

5. Free Wi-Fi is not yet the norm abroad: I cannot lie that it was nice to be completely disconnected from the world for 4 full days. First of all, I had no phone service in the Dominican republic which means I could not make any phone calls. For communication purposes, I did have the option of paying for the wi-fi ($25 dollars for 24 hours, the equivalent of about $1,050 pesos) and could have downloaded WhatsAapp but I choose not to. The company that managed the WiFi at the resort seemed to be a local telecommunications company called Claro (which I later found out is the dominant player in DR for said industry).

6. Speaking of WhatsApp, here is how they will start to monetize: I decided to download the app on my phone while I waited to depart my plane on Monday, just to have it available. Upon my download, I was notified of this interesting piece of news:

After one year of service, they'll start charging $1 per year. Did you know this?! Quite interesting to say the least. If people continue using the service, that will be a nice addition of income to Facebook's (FB) bottom line.

7. Last but not least: It is possible to find investing fanatics everywhere: During the wedding rehearsal all guests got to know each other in terms of what they do for a living and how they know the bride. Needless to say I was super excited when I found out one of the guest was also an investor and of course we started talking about different companies and the performance of various stocks. He gave me names for a couple of companies that he has done well with and I cannot wait to do some research. As always, will make sure to share with everyone here on the blog.

Tell me, have you ever been to the Dominican Republic? Are you an observant of possible investment opportunities when you travel?

As always, thanks for reading & cheers to profits!


Friday, March 13, 2015

One of my favorite companies is splitting its stock {and why you should look in to this}

Hello fellow investors,

Hope everyone had a great week. Today I want to talk about an announcement that Visa (V) made a couple of months ago regarding a stock split. Visa is a portfolio favorite of mine. I bought shares back in late 2012 and haven't looked back since. The stock is up over 84% since my time of purchase. Had I known this was going to happen I would have put my entire portfolio in there. Well, maybe not. But is nice to dream.

This may sound familiar (as I say it a lot on the blog) but I wish I would have grabbed more shares than I did back in 2012. Nonetheless, I am grateful for what I do have and perhaps this new stock split may be a chance to add to my position. Speaking of which, lets get right to business.

Back in January 29th of this year, Visa reported earnings for their first fiscal quarter of 2015. Besides announcing solid year over year increases in important metrics such as  net income, net operating revenue, total processed transactions, and payment volume growth; the company also took the opportunity to announce a 4:1 stock split to take effect on March 19th, 2015 (Thursday of this coming week). If you wish to read the press release check it out here. 

Mini Lesson:

For my beginner investors, just want to clarify what I mean by a split--

  • A 4:1 stock split means that the stock price will be split in 4; and the company will start trading at such stock price going forward. For example, if the stock is currently trading at $266; the new stock price as of 3/19 will be $66.50. If you are a new investor in the stock, you can get a full 4 shares of the company for $266 instead of just one share.
  • On the other hand, lets say you already own 10 shares of the company. After the split, you'll have 40 shares (the amount of shares multiplied by 4).


...not relevant to V but funny nonetheless :)

Now, let me just be clear in that a stock splitting doesn't change the value of the company or the stock. It doesn't mean that all of a sudden the company is worth less or more or that buying a stock when it splits will guarantee anything. While there will be more shares of the company outstanding, the market value remains the same.

Now, you may be asking yourself, why do companies do this? While there are many reasons why a company may want to pursue a stock split, here are two main ones:
  • To make the price more attractive to individual investors who may want to buy shares but refrain to do so due to a "high price". When the stock splits, the price appears more attractive 'psychologically speaking' even if nothing has changed.
  • Helps create a diversified shareholder base or a larger pool of various types of investors lessening the chances that one individual institution or group takes larger control of public shares. Gives the broader public the opportunity to also be a part-owner. 
if you have more reasons you'd like to share, please let me know in the comments.

Why should you care that Visa stock is splitting?

As previously mentioned, the company is one of my favorites. They have an incredibly profitable business model and are at the forefront of changing times as the percentage of people using credit/debit cards as opposed to cash continues to increase exponentially over time. Even with the new smart phone payment systems that are up and coming, people are still using the cards yet simply 'swiping' their phones as oppose to plastic. Either way, companies like visa are still getting their healthy cut for every single transaction that is made and maybe even more so now and in the future considering the popularity of smart phones.

I wrote an investment thesis for why I like companies like Visa and MasterCard on a previous post. You can check out the full analysis for Visa here. The post shows why I feel so strongly about these type of companies and why I am considering adding to my position after the stock split. Maybe this is something you'd consider for your own portfolio (as always, make sure you do your own due diligence).

Thank you for reading.

Tell me, has a stock split ever motivated you to add to a position or buy shares of a company?Or, is that something you don't necessarily care about?

Cheers to profits,


I currently own shares of Visa (V) and MasterCard (MA).

Thursday, February 26, 2015

Top 5 Lifestyle Habits that make me a better investor

Good day dear readers,

First of all-- I want to quickly apologize for the hiatus on the blog. I've been working a whole lot lately (which is amazing) but I also don't want to neglect this space which I enjoy so very much. To my defense, I've also been researching and preparing tons of content for the blog. So, just know that being here sharing my knowledge as well as learning from other fellow investors is a very important part of my life. 

Today I'd like to take some time away from discussing specific stocks to talking about some habits I've been developing over the past several months which I feel have helped me tremendously. Not only in helping me feel great about myself (inside and out) but I feel they've also had a positive impact on how I approach investing and all the work that goes behind making an investment decision.

Here I share with you my Top Five Habits which I feel help me be a better investor:

1. Waking up early: Up until about six month ago, I never considered myself a morning person. I dreaded the idea of getting out of bed and would be so incredibly upset in the mornings. That has completely changed. Part of it probably has to do with the fact that I am doing what I love for a living. Hence, I wake up to my passion and not to a job that I dread commuting to. What an incredible feeling. 

Whether or not you are working on your "passion" waking up bright and early provides a clear mind as well as extra time to prepare ourselves for the day. I like to drink my coffee in peace and quiet and eat breakfast while reading the paper and then making a list of things I'd like to accomplish throughout the course of the day. Early for me is getting out of bed around 6:00 am or so (on most days). However, pick a time that works best for you. You may be thinking 'who has time for that'?! But if you make an effort to set aside 20-30 minutes for yourself each morning, you wont regret it. Just trust me and give it a try.

2. Reading & Listening- A lot: Ever since graduate school ended my business books have been replaced with more business books but this time I am reading more things of interest. I recall being a huge 'fiction' reader when I was a teenager but that has changed drastically as I am now constantly reading books about investing (obviously), self development, entrepreneurship, and motivational books. Not to mention I got myself a subscription to the Wall Street Journal which started back in January and I've been reading that as well (full review coming soon). 

Besides reading, I've also continued my 'habit' of listening to investing podcasts, which is something i've been doing for the last few years. If you follow me on Twitter, you may know my absolute favorite investing podcast which I listen to daily is Market Foolery. I also came across another one of their shows recently which is called Motley Fool Money. I feel that the shows do such an incredible job of explaining what is going on in the stock market in a simple/straight forward way without any 'fancy' and unnecessary terminology. They get straight to the point while keeping it entertaining. I have yet to find any other investing podcasts similar to the ones I listen to but if you have any recommendations, I would love to hear them (email me!).

Full disclosure: I interned at the Motley Fool this past summer but I have been listening to the podcast for nearly 3-4 years (way before I had the privilege of working there).

With all my reading and listening I feel like I am learning so much and absorbing so much information. Knowing about various topics allows me to analyze companies better and understand their mechanics- which in turn helps me in making better decisions of whether or not an industry or a particular product has potential for growth and whether is a 'buy', 'sell', or 'hold' as we say in the investing world. 

3. Working out & Eating Healthy: Let me let you in a little secret- besides the stock market another huge passion of mine is leading a healthy lifestyle. Dont get me wrong, I have a sweet tooth that needs to be watched and controlled and I have been known to sometimes spend too much time on the couch flipping through channels. 

However, over time I've come to understand the significance of keeping my body fit and how it has a tremendously positive effect in other aspects of my life. I have a routine that has been working excellent for me which consists of doing my cardio workouts in the morning hours and strength training in the evenings. I also make a conscious effort to drink tons of water and green tea throughout the day as well as make sure I am consuming nutritious, healthy {yet, delicious} meals and snacks. 

This approach has allowed me to have tons of more energy and a more clear and focused mind. When I was a teenager, I used to see working out and eating healthy as simply a way to 'look good'. Time has made me understand that the benefits of said habits go well above and beyond the physical. It is all connected ladies and gents. I encourage you to do the same. When you feel better, you do better. 

4. Continuous learning: Learning is an ongoing process, specially as an investor in a continuously changing world. Besides tons of reading (as noted above), I have been watching DVDs, online tutorials, enrolling myself in online courses about finance, and the list goes on. My two main goals for the years (when it comes to investing education) are to teach myself how to make money with options and to learn technical analysis. Not sure if both goals will be accomplished but I am putting action behind my objectives. If I can master at least one of the two I'll be a happy camper. It takes time and I am aware of it but I love learning and expanding my mind. So, more than a burden (as some people may see it) I see it as a joy, on a personal level. 

5. Keeping a positive attitude: The power of positive thinking goes beyond just being an optimist; it affects so many parts of our lives. I have a mentality of progress and growth and this is something that I apply to my investments as well. Every time my stocks go up in value I think to myself "I'm rich". While this may be a stretch of the imagination at the moment it still feels good to say it. As the saying goes: 'fake it till you make it'. And that's exactly what I am doing. I also make a conscious effort to remain positive and optimistic in other aspects of my life. Nothing is ever perfect but if we can find the silver lining in most things, it makes for a better quality of life. As cliche as this may sound: focusing on the positive has a far higher return on investment than focusing on the negative. And I truly believe this applies across the board for everyone out there reading this. 

Thanks for reading! 

Would love to hear about YOUR own personal lifestyle habits that make you a better investor, or simply a better person. Also, if you have any recommendations for podcasts, please share! Email me or comment below.

Cheers to profits,


Saturday, February 7, 2015

Radio Shack: The End of an Era {how bankruptcies have shaped how I approach investing}

Although I've never been a shareholder of this company and much less a frequent customer by any means, it made me sad to hear that Radio Shack is filling bankruptcy. I then started to ask myself why I cared so much. Well, the main reasons is probably that I have very fond memories of visiting this store with my dad a whole lot when I was growing up. 

Growing up in the 1990s; Radio Shack was "the place to go" for cool gadgets, cables, house phones, electronics, random artifacts, pretty much anything up and coming could probably be found at this place. I remember my dad loved it. Places like Best Buy or Amazon were far in the future (or maybe not so popular or known) during the time when Radio Shack was "hot".

Something I have learned during the course of my life, specially as a business student in undergrad and graduate school is this:

The world of business is fierce and has no mercy. 
If companies cannot keep up they will get run over.
If your product is making money, no one cares about stealing ideas and running with them.

If you were born in the 80s, like I was (or long before) you probably witnessed many other great companies get disrupted, go bankrupt and/or become completely irrelevant at the blink of an eye. Blockbuster and Kodak are just two companies that come to mind-- companies that were once MAJOR within their industries, at the top of their game. I would conclude that a very small number of people saw the end of these companies coming. Sure, there are visionaries in this world that have the amazing capability of seeing disruptions in particular industries long before they even happen. However, many of us are often surprised and caught off guard. At least it feels that way. 

Now, with the Radio Shack situation, we cant say we didn't see this coming. As a matter of fact, they did try (maybe not hard enough?) to fight the fierce, aggressive, and merciless competition that comes with eCommerce. Perhaps had they not tried at all, Radio Shack would have been long gone several years ago. 

Is interesting to think that not too long ago going to a radio shack used to be the first thing that would pop in to peoples minds when thinking of purchasing electronics or components for any kind of project. Those days are long gone and the company has become an afterthought. Places like Walmart, Best buy, Amazon, or even local pharmacies (which seem to sell everything now-a-days) have taken the forefront in peoples minds when making those type of purchases. As the saying goes:

When I first started investing (about 7 years ago) and people would ask me how I choose the companies I invest in--- I would say that, as a long term investor, I would make most of my decisions by buying companies that had been around for "generations" and I didn't see going bankrupt anytime soon or never. I soon realized this strategy can be a little dangerous and is in fact flawed. Obviously, I have grown tremendously as an investor and the amount of years a company has been around is no longer a determining factor. 

Sure, I still follow that mentality in a way. However, today I am extra careful with this process. For instance, even if the company has been around for generations, one of the main factors I look in to is the industry in which that company operates and how said industry is evolving. If I see any signs of disruption or fierce competition of any kind, that's a red flag for me to dig deeper. 

For example, when I think of McDonald's (MCD), for instance, a company where I've own shares on and off for about 7 years; it makes me wonder whether they will be able to keep up with the disruption in this new generation of "health conscious" people. I believe their brand is still solid and strong and they are in fact part of the 'American trademark'. For instance, if you were to ask people around the world to name "american food" one of the first things that would come out of peoples mouths would be "hamburger" or "McDonald's". But, for how much longer? Maybe for another 20-30 years? Maybe another 10 years? Just something to think about.

Radio Shack was around for 94 years, Lehman brother was around for 165 years, Kodak build an incredible reputation for over 100 years before they became irrelevant due to competition and disruption by the digital world. Blockbuster led what felt like a monopoly in video entertainment for over 20 years. Crazy to think about how irrelevant those companies are today, if they still exist at all. See what I mean?

And that's all folks. 

Tell me, what other brands come to mind when you think of companies that were once leaders and are irrelevant today? What are your thoughts on the Radio Shack Bankrupcy?

As always, thank you for reading and cheers to profits!


Wednesday, February 4, 2015

Disney's stock price hits over $100 per share {and why I am not surprised}

Hello dear readers,

As earning season continues, I am keeping an eye on the reported performance of the companies in my portfolio. Feels like yesterday when I shared the earnings commentary for Disney's performance during fiscal year 2014 (back in November). If you missed it, check out this post.

Another whole quarter has come full circle since then. Disney reported their performance for first quarter 2015, yesterday afternoon after market closed. I wasn't able to listen to the live earnings call but I did read the press release and transcript of said call.

Here are some of the highlights.

Financials Summary

Solid percentage increases were reported in virtually every metric when compared to the same quarter last year. On a consolidated basis--
  • Revenue increased 9% year over year from 12.3 billion reported in first fiscal quarter 2014 to 13.3 billion for this quarter.
  • Net income boosted 17% going from 1.8 billion to 2.1 billion
  • Cash from operations increased an outstanding 53% from 1.2 billion to 1.8 billion
  • Segment operating income was up 17% from a little over 3 billion to 3.5 billion
  • Free cash flow increased 55% from 554 million to 857 million
*The full report breaks down earnings in to each individual segment and corresponding metrics. If you wish to read further in to this, check it out here.

The Magic of 'Frozen'

The word 'frozen' was repeated only nine times during the earnings call. I was actually surprised and was expecting the word to come up more often considering the impact this movie has had on the bottom line of Disney, specially for this past quarter. 

As per Disney's CFO Jay Rasulo: 
"Revenue at Disney consumer products rose 22%...and operating income surged 46%...reflecting growth in both, licensed merchandise and sales at the company's retail stores..."Frozen" dolls, toys and other products were the largest driver of that growth"

Frozen was deemed the #1 toy brand for the year 2014, as per study from market research firm NPD group. The blockbuster hit, released in November 2013, earned almost $1.3 Billion at the box office internationally. Source 

Here are some of the 'frozen' references made throughout the earnings call:

"Higher operating income was due to an increase in home entertainment results, higher revenue share with the Consumer Products segment due to the performance of Frozen merchandise and higher TV/SVOD distribution results driven by more titles available internationally."

"The increase in operating income at Merchandise Licensing was due to the performance of merchandise based on Frozen and, to a lesser extent, Disney Channel properties, Mickey and Minnie, Spider-Man and Avengers."

"At our Retail business, higher operating income for the quarter was due to comparable store sales growth and higher online sales in all regions driven by sales of Frozen merchandise."

"Improved operating results were due to an increase at our mobile games business driven by the success of Tsum Tsum and Frozen Free Fall..."

Income was down in one single segment

While ESPN continues to be a solid leader within the world of sports-fanatics; cable operating income was down 2% thanks in part to rising sports rights prices. This is something I would keep watching in future earnings calls. Apparently having the right to broadcast popular sports show is expensive and Disney doesn't get any discounts for the privilege of offering this service to its viewers. Ever wondered how athletes are able to sign contracts for millions and millions of dollars? well, then can thank ESPN in part for that. 

Why I am not surprised at Disney's success and why I see this getting better

Disney is unique. There is nothing like it. Sure, you can compare it to other "entertainment" power  houses but it is my honest believe that this company is on a league of its own and they have been able to keep this up for generations. While some major corporations have been completely disrupted and destroyed by the fast-pace world of technology advancements- it seems that the management at Disney has done a phenomenal work keeping up. Remember this company has been around for over 90 years!

Strategic use of Technology. Just recently, Disney launched launched a devise called "MyMagic+"-- the technology was designed for their theme park visitors and consists of a wireless wristband meant to help customers plan their visit around the park more efficiently, as well as ease the process of making purchases within the park. You can read more about this innovation here. 

New state of the art theme park coming soon. As you may have also heard, Disney is opening a brand new, state of the art, theme park in Shangai, China scheduled to open doors in the the Spring of 2016.

Star Wars. After the acquisition of The Star Wars franchise, the first movie production is set to come out in December of this year. It will be interesting to see how this acquisition will benefit Disney's bottom line and how they will further monetize the brand. As per CEO Bob IgerThe new Star Wars film, which opens in December, would start “a new era of exceptional Star Wars storytelling that will be an opportunity for growth across all of our businesses.” Source

New exciting characters. Just five days ago, Disney announced plans for introduction of the first Latina princess, Elena, set to make its exciting debut next year on the Disney Junior animated show "Sophia the First". I feel this was way overdue considering the fast-growing Latino population in this country. There appears to be a lot of excitement around this new development. This new addition can represent a strong source of additional revenue for the already successful repertoire of Disney characters.

...and so much more. If I continue listing all of Disney's sources of income and why I feel they will continue being successful it will take me a while to finish this post.

So, that's all folks.

Tell me, What are your thoughts on Disney's brand and the company as a whole? How do you see Disney transforming in the next 10, 20 years? 

Thank you for reading and cheers to profits.


Friday, January 30, 2015

Shake Shack: A delicious new stock joins the NYSE

Lets welcome SHAK to the NYSE

Regardless of whether I plan to invest in a company or not--- IPOs* are exciting days in my book. Specially when it comes to companies and/or services I am familiar with and have experienced in the past. My first time at a Shake Shack location was back in 2013 when I worked in the Wall Street area of Manhattan. I visited this particular location by Fulton street. Despite what felt like an eternity waiting for a burger and fries (I was on my lunch hour) the wait was well worth it. I don't remember experiencing a more delicious burger in my lifetime. The burgers are freshly made to order, which is one of the reasons why I had to wait (plus, the long line in front of me).

After filling for an IPO* in late December, things apparently moved quite quickly for Shake Shack as today is their stock market debut! The initial public offering price has gone from an originally disclosed $14 all the way to $21, which is the price at which the stock is set to start trading today, as per the WSJ.

I don't personally plan to invest in the company any time soon mainly because I don't invest during an IPO day or any days near it for any company. I like to wait for the "hype" to settle in order to be able to see with clear lenses rather than getting swiped up by the excitement. However, after doing some research on the company's background and learning some facts I was not aware of, I realized this could actually be a good investment. However, I will sit and watch for now. 

*IPO: Stands for Initial Public Offering. In simple terms, is the name given to shares of a company that have never traded in the stock market before. Think of it as an "initial offering" to the market. 

Company Background

As a former MBA student, I always find stories of entrepreneurship  pretty inspiring. As per their website-- founder Daniel Meyer, opened the first Shake Shack location around 2001 and was originally meant to be a simple hot dog cart in the middle of Madison Square Park in New York. The mission behind the cart was to use the sales to support the Madison Square Park conservancy first art installation. For three summers in a row, the cart became increasingly popular. In 2004; a permanent location was opened in the park (which is still there today). 

Today the company has several U.S locations in Pennsylvania, Las Vegas, Washington DC, and Chicago. They've also branched out internationally with locations in the middle east, United Kingdom, Turkey and Russia. 

Competitive Advantage (differentiation)

This company is far from a McDonalds or a Burger King heating up frozen burger patties. They seem to be following the new trend of pure, hormone-free, healthy ingredients that other super successful companies have been adapting in the past several years (think Chipotle). As most of us have probably noticed; the popularity of "ingredient-conscious" restaurants have increased tremendously during the past several years. Even if we are eating a hamburger, I guess that 'psychologically speaking' we'll feel a lot better about it knowing that the ingredients are pure and free of antibiotics or any other artificial chemical out there.  Millennials and people in general are looking to be healthier and if the food is also amazingly delicious, thats a win-win. 

Check out the menu description of the burger patties:
"100% natural angus beef. No hormones and no antibiotics ever. Our proprietary Shack blend is freshly ground. All burgers are cooked medium unless otherwise requested". 

This theme is pretty consistent throughout their entire menu. 

Aside from hamburgers, fries, and shakes, their food menu also includes hot dogs, a delicious variety of "frozen custards"- dense frozen goodies, crinkle cut fries, and get this-- even meals for your 4-legged friend (they have a "woof" category in their menu at certain locations). Here is their NYC menu at a glance.

Financials/"Prospectus Info"
  • A total of 63 restaurants world-wide
  • Out of the 63 restaurants: 31 are company-operated (including seven in Manhattan), 5 are licensed throughout the U.S, the remainder are internationally licensed, including 20 in the middle east. 
  • Each restaurant is valued at around $10.7 Million
  • Sales for the trailing 12 months were of $107M with profits of $0.66M 
  • With an IPO of $21 a share, the company is being valued at $745.5 million <-- whether or not this is a little rich for a 'burger joint' is up for debate. 
  • The deal has already sold 5 million shares to institutional investors, raising $105M (reason why IPO price shoot up to $21 per share)
Plans for Growth and Expansion

One of the main reasons why companies go public is to gather substantial funds that will allow it to expand and grow to its best potential. The "Shack" is no exception. Their prospectus indicates that beginning fiscal year 2015; they plan to open at least 10 company-operated restaurants in the U.S per year with a goal of at least 450 new restaurants in the U.S. Plans for expansion at the international level were not quite clear but appears they may continue the licensing model for those locations.


Lets not forget about other companies out there with a "similar" concept of serving delicious burgers made to order. A couple from the top of my head are In-N'-Out burgers and Five Guys. The latter already has a strong presence in NYC and while we are still waiting for the privilege of an in n' out-- I would not be surprise if they appear at a corner near us in the near future. These companies I just mentioned are not yet publicly traded but who's to say that's not already in the works? Lets stay tuned and see what happens. 

And that's all folks. Thank you for reading. Join me today in observing how this stock does during the stock market debut. Exciting times for the Shake Shack team, ladies and gents.

Thanks for reading and cheers to profits!


Thursday, January 29, 2015

COACH: Still not where it needs to be but showing improvement

Side note: This is my 100th post on the blog! I absolutely love blogging about one of my passions which is finance and investing. Thank you for reading and your ongoing feedback. Means a lot to me.
Coach: Earnings Commentary
I woke up bright and early this morning to listen to a live earnings call (something I have never done before, as I usually read the transcripts after the calls). The experience was pretty cool and I plan to do that more often. I imagined myself as a part owner of this company waiting to hear what my "employees" had to say about their performance during this last quarter.

Obviously I live in an imaginary world as I don't own enough shares to call Coach's management my "employees". However, feels good to think it. As a shareholder of Coach for the past 2+ years, that's kinda' true, wouldn't you agree? Please don't judge me.

Anyways, as I listened to the call my heart kept sinking with all the announcement in the drops of sales and revenue in several segments and poor performance in Japan. I then felt a lot better as I soon realized that these reported decreases were actually an improvement  from prior reports. Looks like slowly but surely Coach, Inc. is showing signs that their aggressive initiatives and strategies to turn around the company are finally paying of. I then thought to myself:

"What a relieve!"


  • Total sales decreased to $1.22 million, a drop of 14% in comparison to the $1.42 million reported during the same quarter last year. Part of this was attributed to the strengthening of the dollar.
  • Reported profit of $183.5 million ($0.66 per share), a decrease from the $297.4 million ($1.06 per share) reported during the same quarter last year.
  • Comparable store sales in North America decreased 22%, an 'improvement' from the 24% decrease reported last quarter. This was specially noted for their bricks and mortar channels (actual stores v. online). The improvement was attributed in part to a newly introduced "Modern Luxury Concept" which features designs by their new creative director, Stuart Vevers as well a revamp of their marketing campaigns.
  • In a year over year basis, North American sales were down 20%, international sales decreased 1%. Although sales are weakened in Japan (partly due to a weak yen); china continues to show strong demand. Sales in Europe continue strong with double-digit growth.

Plans and Initiatives

“We are on track with the strategic agenda outlined in June and know that our transformation will take time – it is an iterative process that requires significant investment. As we look over our planning horizon, we remain confident in our roadmap to reinvigorate long-term sustainable growth and realize our vision for global modern luxury.” -Victor Luis, CEO.

  • Coach continues to make aggressive "transformation" moves which include the closing of under-performing stores and redesigning stores at premier target locations around the world including New York City and parts of Europe. 
  • Enticing demand in their male merchandise-- participated in their first man wear fashion show this month in London.
  • At the very beginning of this year, Coach agreed to acquire show brand "Stuart Weizman" in a deal valued around $547 million which will be paid mostly in cash and some debt. The coach brand is confident this new acquisition fits perfectly in to coach transformation in to a "lifestyle brand". Stuart Weizman has sales of about $300 million per year. As stated by Mr. Luis: "...And, as announced, just after the quarter ended, we signed a definitive agreement to buy luxury designer footwear brand Stuart Weitzman, which we believe has significant domestic and international growth potential.”  

The bottom line

To be quite honest my head was spinning as I listened to the call. I appreciate the improvement and understand the company has some time to go before it turns around completely. In the meantime, I continue collecting my dividends- currently at solid yield of 3.60% per year ($1.35 per share). Thankfully I have a long period of time ahead of me when it comes to my portfolio and investing. I am grateful in knowing that the money I invested in Coach is money that was designated for investing purposes and I can let it be. I will continue to watch the company's developments as the quarters go by and from what I can deduct, it wont be long before we'll be able to see a strong turn around towards increased profitability. Patience is virtue, specially with this stock.

**The stock has been up over 7% today after earnings call.

As always: Thank you for reading and Cheers to profits.