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Michael Michaud is the founder of Invest2Success.com (http://www.invest2success.com/) and the Invest2Success Blog (http://invest2success.blogspot.com/). He has been investing and trading in the financial markets since 1989. He founded Invest2Success.com to empower individual institutional... More
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  • This Weeks Free Stock Pick

    Dominos Pizza

    This Weeks Free Stock Pick - Investing in Restaurant Earnings Growth

    Domino's Pizza, Inc. (NYSE:DPZ) posted another set of stellar quarterly results recently despite a tough consumer environment. Shares of this Zacks Rank #1 (Strong Buy) soared to a new all-time high as analysts raised full year estimates.

    Domino's is one of the world's largest pizza restaurant brands with 11,250 stores in 75 global markets. It's international sales now account for more than 50% of the company's revenue.

    Its one of the leaders in the restaurant industry in deploying digital channels, such as smartphone and iPad apps, to take sales.

    In June 2014, Domino's debuted voice ordering for its iPhone and Android apps.

    Another Earnings Beat

    On Oct 14, for the fourth straight quarter, Domino's beat the Zacks Consensus Estimate for the third quarter. Earnings were 63 cents compared to the Zacks Consensus Estimate of 61 cents.

    It has an impressive earnings surprise track record, only having missed twice in the last 5 years.

    Dominos Pizza Stock Chart

    But it wasn't earnings which impressed investors.

    Domestic same store sales jumped 7.7% year over year while international same store sales rose 7.1%. It was the 83rd consecutive quarter of international same store sales growth.

    These same store sales numbers put Domino's among the elite of the restaurant brands right now, along with the likes of Chipotle.

    Total revenue rose 10.5% due to higher supply chain revenue from increased volumes in the supply chain centers and elevated commodity prices, especially cheese, as well as increased sales of equipment and supplies to stores that are reimaging.

    Shares Jump to New High

    Shares surged to a new all-time high on the results.

    But if you're buying them now, you're not getting them cheap.

    Domino's trades with a forward P/E of 28.8, the highest forward P/E since the company went public in 2004.

    It does have growth, however. It has an impressive earnings growth history over the past 5 years.

    Dominos Pizza Stock Chart

    Analysts expect earnings to rise another 18.6% in 2014 and 17% in 2015.

    If you're willing to pay up for the growth and you're looking for a consumer-play, then Domino's is certainly one to keep on your short list.

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    Oct 21 7:37 PM | Link | Comment!
  • Twitter Jumps Into The Mobile Online Payments Space

    Initial Public Offering

    Twitter Jumps Into the Mobile Online Payments Space

    Twitter Inc. (NYSE:TWTR) Teams Up with French Bank on Mobile Payments by Zacks Investment Research

    Twitter Inc. (TWTR) has recently teamed up with major French bank, Groupe BPCE, in hopes of finding new ways of expanding its commerce offerings of its own. The move comes in as Apple Inc. (NASDAQ:AAPL), and other companies like Facebook Inc. (NASDAQ:FB) eye money transfer payments as a new market, in which there is lots of room to burgeon.

    Online payments definitely seems like a good, innovative method for TWTR, as it will push the firm's revenues forward, and will also allow for more active daily and monthly users, as they will be tweeting their money payments/transfers with friends or others on TWTR. The competition is not just between TWTR, FB, AAPL, Google Inc. (NASDAQ:GOOG), but also between major credit card issuers and banks, such as Visa Inc. (NYSE:V), and MasterCard (NYSE:MA).

    September and so far in October, worldwide markets have been very turbulent, and volatile, and that is due to lots of global concerns, but also due to the oil glut, that is causing oil prices to dip, which has in turn, negatively affected investors' sentiments regarding equities and ETFs. Could TWTR be a solid stock to hold on to though, despite this large correction?

    It is currently a Zacks Rank #3 (Hold), however that is only probably due to the sell-off that has rocked the Dow Jones Industrial Average hard, especially in the last several trading days. Twitter was a Zacks Rank #2 (Buy) prior to the stock market correction, and the social platform's stock has definitely got a lot of room to grow. This may be especially true if TWTR can get this mobile payment system off the ground and see some traction in the French market.

    Details

    TWTR users in France will use S-Money, Groupe BPCE's method for transferring money online, and it has bypassed security issues through not requiring users to show bank details or personal information. TWTR has been good in releasing new products and services, such as Twitter Buy, which enables users to search for their desired items, and buy them directly off of TWTR, so S-Money seems like a great route, so as not to solely rely on advertisements for revenue, however, the online payments market will be tested when Apple Pay debuts later this month.

    Nonetheless, TWTR's earnings in November will indicate whether the company's recent acquisitions and innovations have harvested fruit. Analysts have revised and upped their EPS estimates for the current quarter (9/2014), however EPS estimates have not really changed from -0.27, and TWTR has not been very good in surprising EPS expectations, as it carries an average surprise rate of -106.40% over the past four quarters.

    Additionally, TWTR has had a very volatile year, as it has surpassed the S&P 500 Index's performance from around August till today, while earlier in the year it was an underperformer. Investors should err on the side of caution till the market settles down a bit, and a more solid social media platform to invest in would be FB, which is currently a Zacks Rank #1 (Strong Buy), or even LinkedIn Corporation (NYSE:LNKD), which sports a Zacks Rank #2 (Buy).

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    Oct 14 9:35 PM | Link | Comment!
  • This Weeks Free Stock Pick Restaurant Earnings Growth

    Chipotle Mexican Grill

    This Weeks Free Stock Pick - Investing in Restaurant Earnings Growth

    Chipotle Mexican Grill (NYSE:CMG) is one super-star stock with both price momentum and the earnings momentum to justify it. Since the company reported a big 15% EPS beat for Q2 in July, the stock has been a Zacks #1 Rank Strong Buy.

    The $3.50 per share reported earnings were 24% higher year-over-year on the back of solid top-line growth. Revenues also beat the consensus mark and increased 29% year over year, thanks to higher "comps" (same store sales) and unit expansion. Despite the recent menu price hike, comps grew year over year as well as sequentially driven by higher traffic.

    Chipotle has been witnessing a fairly stable traffic trend over the past few years driven by strong market position, innovative menu launches and increased media exposure.

    Given this recent back-drop and the more than doubling of the share price since a July 2012 earnings miss, investors may be looking forward nervously to next Monday October 20 when CMG reports its third quarter results, for which they had also raised guidance in July.

    What Makes CMG So Successful?

    Obviously, this "burrito machine" has been the premier growth story of fast-casual dining.

    Maybe that's because they seemed to so effectively model the extremely efficient food service "machine" that one-time investor, McDonalds (MCD - Analyst Report), perfected with its systems and attention to consistency and details.

    And I can tell you from experience that there is almost always a line at the Chipotle stores I see in the Chicago metro area. Delicious, quality food prepared fast and consistently, at a reasonable price and by friendly staff, keeps them coming back for more.

    Did I mention healthier-than-your-average fast casual fare and a focus on environmentally-friendly ingredients? Their "Food With Integrity" mantra has strong appeal with many consumers. And if you read about the company's commitment to these programs, you get the sense it's not just for show.

    But is the stock reasonably valued for its growth metrics?

    My colleague Neena Mishra featured CMG as Bull of the Day in July and addressed this question.

    Is the Premium Valuation Justified?

    Chipotle's stock in not cheap! Its current trailing 12-month earnings multiple is 58.2x, representing a premium of 76.4% to the industry average. Per Zacks Research, the company's shares have traded in the range of 22.3x to 57.7x trailing 12-month earnings during the last five years.

    However Chipotle's valuation appears to be justified due to its continued strong sales growth despite tepid industry sales trends. With its innovative food culture, effective marketing and a strong business model, Chipotle has a lot of room of grow.

    So far, they have been able to attract more and more new customers and keep their customers coming back. Further, the company is likely to realize the full benefit of menu prices increases from the third quarter onwards.

    Also, the company still has a substantial untapped potential for growth, particularly in international markets. According to the Wall Street Journal, "at a $20 billion valuation, Chipotle is approaching two-thirds the size of Yum! Brands (NYSE:YUM), which has a $33 billion market cap and more than 40,000 of its KFC, Pizza Hut and Taco Bell outlets in 125 countries around the world. Chipotle, by contrast, has just over 1,500 restaurants, only a handful of which are outside the U.S."

    Will Slower Growth Deter Hungry Investors?

    The current Zacks Consensus for CMG's Q3 bottom line is EPS of $3.84. That's up from $3.47 about 3 months ago before the strong Q2 report. And the analysts as a group believe that successive quarters will have a lot more $4 handles as the consensus estimate for next year climbs to $17.32 from $13.72.

    That's 26% earnings growth. But that's also a drop from this year's projected 32% EPS growth. Obviously the company can't keep growing at 30% every year. But that becomes the really important question about when the premium valuation matters.

    Right now at a share price of around $650, investors are paying about 38X for next year's $17.32. This is one earnings report I'm watching closely next week to see if that multiple is still appetizing to the institutional investors who have made CMG a super-star stock.

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    Invest2Success "Profit Rockets" Stock Picks
    Free Trial - Receive daily low-risk high-reward SP500 NYSE Nasdaq buy-long and short-sell stock picks that are experiencing strong increasing and decreasing earnings, that include buy sell entry, stop-loss, take profit area price targets, and trade management information to your email inbox.

    Van Tharp Institute
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    Van Tharp Institute
    Investing Trading Home Study Programs & Live Seminars Workshops

    Dedicated to cutting edge, high quality professional educational investing trading programs for traders and investors providing a road map for financial freedom. The finest investing trading education in the financial universe. Dr Van Tharp is one of the orginal Market Wizards, and referred to as the Traders Coach.

    Track n Trade Trading Software

    Track n Trade CandleStick Auto-Recognition Plug-in
    Quickly identify candlestick patterns without thinking. With Track 'n Trade, you have the ability to click, and select your favorite candle patterns, and have Track 'n Trade find, identify, and even auto-trade each signal through our famed Autopilot Trading System.

    Candle Charting Intensive Training

    Steve Nisons Candlestick Charting Intensive Training and Software
    for Profitably Trading Stocks Forex Futures Commodities

    Use the CandleScanner trading software to automatically scan for profitable trading setups on any timeframe. Stock forex and futures candlestick trading courses to throughly understand how to profit from candlestick chart patterns. Free newsletter and live trading webinars. Steve Nison is the authority on trading and profiting using candlesticks.

    Live Trading Seminars

    Stock Option Forex Futures Training Seminars Webinars Workshops
    Click Here For The Complete 2014 Schedule

    Professional investors traders teaching successful low-risk high-reward trade strategies. Power profit secrets for stocks, options, forex, futures investing trading success. Or avail of Home Study Courses and or Trading Softwares available to improve your investment returns.

    Oct 13 9:18 AM | Link | Comment!
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