Off the Record- Restaurants
2008-08-05 12:47:38
This week's Off the Record features a focus on restaurants. In these tough economic times, picks in this sector are tough, but these CEOs and analyst managed to find some bargains: Three analysts were very positive about BJ's Restaurants (BJRI):"I love BJ's management, with Gerald Deitchle, who was the former CFO of The Cheesecake Factory. He understands how to launch a national, premium chain like this. I like what he is doing there." "On the smaller cap side, I think it's BJ's management. Gerald Deitchle and his group of executives are among the best in terms of smaller companies in the business." "I just really have to compliment their effort, especially in this difficult environment. I admire their taking a long-term approach to their business and staying on course. Also, they are being very strategic about every decision, being very cognizant of current conditions, but not getting too caught up in it."And an analyst and a CEO picked Panera Bread (PNRA):
"In terms of the one that has reacted best to this difficult environment, I'd give Panera the best grade there. That's partly because they messed up last summer, but they fixed it quickly." "Panera is a name that I admire and respect. You can't buy another franchise at Panera. They're pretty well sold out."For the Off the Record report on Restaurants, including more stock picks despite the current economic climate, click here.
Teen Retailers to Stay Away From
2008-08-04 16:01:24
Delving into our focus on retail/restaurants this week, we spoke with analyst Brad Stephens about his area of coverage: teen retail. When we asked Mr. Stephens what was attractive in this space, right out of the gate, Mr. Stephens told us "Not much." Though there a few companies Mr. Stephens recommends (available in the full interview) below are two he recommends you stay away from:- bebe (BEBE)- "It's at $9.60 today, it's got $4 a share in cash, and it generates cash. So theoretically you would think this is the time to be buying it; unfortunately they have a very large exposure to the housing impacted states, especially California and Nevada, and that customer is starting to trade down a little bit. They are starting to move to the fast fashion retailers like H&M and Forever 21,and on down the line. So they are trading down. Until they recarve out the niche, results continue to be under pressure. And also I think when you look at the fashion out there, you're seeing a trend away from patterns and they are very strong in patterns. So it seems like everything happens to be moving against them right now."
- Hot Topic (HOTT)- "It's a very cheap stock theoretically, it trades about 3.5 times EBITDA. They have a niche with punk rock, very music oriented, but the problem here is that over the last two second halves of the year, they've improved their merchandise margin about 600 basis points, all through better inventory management, yet they haven't had a positive quarter of traffic trends in their stores. So the number of people going to their stores has gone down for 17 straight quarters. If they continue to do that, ultimately you deleverage your fixed costs and the situation can get very ugly. So while the stock is cheap, we would prefer to be other places right now."
The Games in China Go Online
2008-07-29 14:36:24
One of our special focuses this week is on gaming and online games. As a part of this special focus, TWST spoke to analyst Tian Hou- who talked to us a little bit about the online games part of this space- and specifically in her region of coverage: China. She gave us a few ideas about what company's to look at in this space:- Perfect World (PWRD)- "The name I like the most is Perfect World because this company has become the biggest game exporter of all the Chinese game developers. They develop what we call 3D games, and normally they can come out with a game in six months with a $0.5 million R&D cost. It is the best R&D team in the world. 3D games take other game developers two or three years and $3 million to $5 million to develop worldwide, so you can see how fast this company is and how good they are. They have been exporting games to many countries. One game they export to 14 countries, another game they export to seven countries you add them all together, it's 37 countries. Nineteen of them have already had a commercial launch. There are 18 more to come, and next year if all those games can be fully operational, we're looking at a huge licensing revenue for this company that has been underestimated by the Street."
- Netease (NTES)- "The other company I like is NetEase. They run games with the time-based model and they have figured out how to grow a time-based model game recently. It grew rapidly in 1Q08. In addition, they also have some smaller games added to the portfolio, so we expect the existing games along with the newer games to make contributions to growth going forward. "
- Shanda Interactive Entertainment (SNDA)- "The other company we like is Shanda. It is not strong in in-house R&D, but it is very strong in operating a game. We do think that eventually this company may become an operator rather than a game developer, as the China game market becomes more segmented or specialized"
TWST Goes Animal
2008-07-28 10:49:06
Today- July 28, 2008- marks the 30th Anniversary of the landmark teen comedy, Animal House- starring John Belushi. This was the first film venture for the company National Lampoon (NLN). The film grossed more $140 million- a record at the time. Read TWST's exclusive interview with the current CEO of National Lampoon, Daniel Laikin.In it, Laikin talks about the company's history, licensing strategy, online businesses and plans for the future.
Starbucks Cools Off
2008-07-02 15:29:04
Yesterday, Starbucks (SBUX) announced that it would be closing 600 stores and cutting 7% of its workforce, as a result of the decline in consumer confidence that have lowered its stock price more than 50% in the last two years. Analyst David Palmer of UBS predicted this negative trend at Starbucks back in his January interview with TWST, and went into detail with us about what's gone wrong with the coffee giant. Click here to read the exclusive interview. Also take a look at TWST's interview with now CEO of Starbucks back before the current slowing trend. Click here read the exclusive interview with CEO Howard Schultz.