Tough Times for Tim's

Tim Horton's Inc.(THI) may not be completely immune to the influence of a waning economy, but its market positioning, in addition to a habit-forming
bestselling product, should be an asset during leaner times, analysts say.

"Tim Hortons derives more than 40% of its sales from coffee, an inexpensive (and addictive) product," analyst Stephen Boland of Odlum Brown said in a note to clients."The habitual nature of visits combined with relatively low product cost should make it less sensitive than many other discretionary items."

The company's balance sheet is also in "excellent" condition, he noted. He maintained his buy rating and $42 target price on the shares.

Comments

[Cameron McK...:]

Yes, it's always wise investing in addictive products. :)

The future of Tim Hortons is not same store sales, though. It is opening up new stores in new locations. If we can't find investors to open stores in the states, which will be the case if money is tight, then the franchise won't expand, and we won't meet our expectations.

Tim Hortons is a story about growth and expansion, not relying on return visits, like McDonalds or Wendys, both of which really don't have any significant store growth opportunities in the US.

2008 Sep 05 01:39 PM