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  • Cracker Barrels Mounting Returns Make It A Good Addition To Your Portfolio

    Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is a popular provider of down-home cooking in its restaurants, as well as country store merchandise in its adjacent gift shops. Cracker Barrel locations deliver to guests a welcoming home-away-from-home atmosphere and home-style country food.

    The very first Cracker Barrel was founded in Lebanon, TN by Dan Evins on September 19, 1969 as a result of Dan's vision of helping people on the road to escape the fast food frenzy and get home-cooked meals in a comfortable homey setting. His vision also included a country store atmosphere where travelers could indulge in such comforts as treats from jars of candy, homemade jams and jellies, and a myriad of unique gifts. The company also offers its exclusive line of country store merchandise on-line at http://shop.crackerbarrel.com/.

    The company went public in 1981 and became one of Money Magazine's top ten stock offerings in the U.S. as well being named as one of the country's leading growth chains by Institutions Magazine. Cracker Barrel opened 84 new locations nationwide from 1980 to 1990 and by mid-1996 the company had 257 locations. The company's goal to preserve the nostalgia of a bygone era spelled success over the years and the board of directors' choice to keep all stores company-owned without offering any franchising has helped Cracker Barrel to maintain a consistent image and food quality that consumers can count on. WD Partners and Nations Restaurant News have both awarded Cracker Barrel top honors in their Consumer Picks surveys' family dining segments for reputation, atmosphere, cleanliness, service, menu variety, food quality, craveability, likely to recommend, and likely to return, overall outscoring its competitors by more than 6 percentage points.

    Today the company employs approximately 70,000 people at 622 locations in 42 states, generating close to $2.6 billion in revenue as of the end of 2012. The Cracker Barrel Old Country Store, Inc still has its home office in Lebanon, TN where it all began. Much of Cracker Barrel's rapid growth in popularity and profits over recent years is due to:

    • Prime locations nationwide near interstates
    • New restaurant technology
    • Innovative staffing
    • A rigorous recruitment strategy
    • New highway billboard designs
    • NASCAR Atlanta 500 sponsorship
    • Grand Ole Opry sponsorship
    • Celebrity partnerships with-
      Alabama
      Kenny Rogers
      Alan Jackson
      Dolly Parton
      Alison Krauss
      Josh Turner
      Charlie Daniels
    • Cracker Barrel licensed products in retail stores
    • Restaurant check amount increases of 2.6 percent annually

    The 52 week low for CBRL was $57.99 and the high $87.81 and, as of the date of this review, the last price was $88.37 on 5/28/13, which was up by $1.40 over the previous day's close with a volume of 83,000. The company made a regular common shareholder dividend distribution of $0.50 per share on 5/6/13.

    CBRL has a sound payout ratio of 34 percent with an extremely solid 2.6 percent dividend yield. The company's PEG is 1.6 and its dividends have grown consistently over the past five years by a stable annual 23 percent. The S&P is expecting growth of one to two percent for the coming year in comparable sales in the full-service restaurant industry and a 0.5 percent increase in customer traffic for this year. Fellow SA contributor Marshall Hargrave reviewed five undervalued safe dividends stocks with "less than 60 percent payout ratio and a less than 2 percent PEG, all of which have grown the companies' dividend payments by more than 20 percent annually for the past five years." CBRL is one of those five stocks chosen with an expectation of dividend payments continuing to increase along with CBRL's stock price

    CBRL yields 2.5 percent and trades @ 17.70 times earnings. Making CRBL still a good value. The company has raised annual distributions by just under 53 percent per year over the past ten year period. In view of Cracker Barrel's rapidly growing popularity, along with its ever-increasing number of locations nationwide, CBRL seems to be more appealing with each passing day. With increasing dividends and related growth, both in physical restaurant/general store locations as well as online sales, CBRL is sure to continue growing its performance.

    Strong Management leads the charge, under James W. Bradford Jr., Chairman, and President/CEO, Sandra B. Cochran, returns mounting dollar amounts in the form of healthy dividends to shareholders. Even during the recession, CBRL returned an average of 19.8 percent annually. Although payout growth lagged a bit during 2009 and 2010 at 8.15 percent and 2.5 percent respectively, CBRL's big comeback was 11 percent in 2011 and a whopping 53.8 percent in 2012 plus 42.9 percent so far for 2013. So, obviously CBRL's growth is ever-increasing every year since 2011 at a more than respectable rate.

    One more reason for liking Cracker Barrel is the existence of a major 20 percent investor @ $355 million, who is also an activist, constantly compelling continued growth within the company and propelling them toward improved performance. His name is Sardar Biglari and he manages the Lion Fund, as well as Biglari Holdings, which owns the Western Sizzlin and Steak 'N Shake restaurant chains.

    In recent news, James W. Bradford Jr., Chairman of Cracker Barrel, made Biglari an offer to buy back his CBRL holdings at market price. This sale would have made Biglari approximately $70 million in appreciation on his shares, however he flatly refused the offer. Experts say that this action illustrates that Biglari is seeing an upside to CBRL and this could add increased value to the stock. I'd be happy to own a solid company along-side such a successful institutional investor as Biglari.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: CBRL, long-ideas
    May 31 2:55 PM | Link | Comment!
  • Zillow Is Ready To Zing!

    About Zillow

    Zillow, Inc. (NASDAQ:Z) is a real estate and home-related information marketplaces. Zillow provides products and services to help consumers through every stage of homeownership buying, selling, renting, borrowing and remodeling. The Company make home-related decisions, and enabling homeowners, buyers, sellers and renters to find and connect with local professionals. Individuals and businesses that use Zillow have updated information on more than 37 million homes and have added nearly 100 million home photos. These profiles include detailed information about homes such as property facts, listing information, and purchase and sale data. In June 2012, the Company acquired RentJuice Corporation. In October 2012, the Company acquired Buyfolio, an online and mobile collaborative shopping platform. In December 2012, the Company acquired San Francisco-based HotPads, a map-based rental and real estate search site.

    Zillow has experienced exponential growth over the last year and their share price has clearly followed suit with optimism from institutions and retail investors a like. As you can see from the chart below is trading just under a 52-week high. Despite the gains already locked in there is a lot more upside in this stock.

    (click to enlarge)

    Upgrades:

    Just recently, on April 16th, Zachs Investment Research upgraded Zillow with a strong buy recommendation. That was not ill advised as Zillow has implemented many game changing realestate tools for the online age. Among them are mobile apps for renters and buyers looking for realestate. New tools for agents and brokers that want to expand their business and an expansion into the ever important Spanish market to support that booming population.

    Traffic:

    If Alexa.com is any indication traffic is heading in the right direction as a quick look shows zillow steadily climbing the ranks as one of the internet's most popular sites. Currently ranked in the top 375 sites globally and a very impressive 63rd in the United States. Up from the 450 range at the start of March.

    Short Interest:

    A quick check of outstanding short interest shows that a monster squeeze could be on the horizon if Zillow posts another impressive quarter. A whopping 24.83% of the total shares in the float are reported short. With a tiny average daily volume of only 435,000 shares this has the potential to mean a 33% or bigger gain on any significant surprise in the earnings.

    Earnings:

    Historical earnings performance has also been very impressive. Three out of the last four quarters were earnings beats with an average beat of over 400%. That momentum has propelled Zillow into a whole new price range. Zillow is scheduled to report earnings after the close on May 7th. I for one will be watching the pending results and look for Zillow to crush the competition well into the future.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in Z over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: Z, long-ideas
    May 06 9:35 PM | Link | Comment!
  • Using The S&P 500 And The Nasdaq To Buy EBay

    The following is based on a largely technical perspective.

    An opportunity to maximize gains by going long on (NASDAQ:EBAY) stock will happen when EBAY and the NASDAQ Composite Index are both below their respective 50, 100 and 200-day SMAs. As of April 21, 2013, EBAY stock price is too high for a reliably profitable entry point. A significant correction or recession that would drive EBAY prices below the aforementioned SMA levels will present a better buying opportunity.

    Though a fundamental analysis would certainly help this recommendation's credibility, a detailed look into the financial fundamentals of eBay and relevant competitors such as Amazon (NASDAQ:AMZN) is beyond the scope of this article.

    Technical Analysis

    Prominent stock indexes such as S&P 500 or the NASDAQ Composite Index (^IXIC) are good proxies for the direction, though not magnitude, of EBAY stock behavior. Over the last ten years, EBAY had a positive correlation with the NASDAQ index. EBAY is notably more volatile, and this volatility can affect final returns over a given time frame. For instance, the 10-year time span between April 14, 2003 and April 15 2013 has given both, ^IXIC and EBAY investors a roughly 120-130% return on investment. By contrast, Jan 3, 2000 to Jan 4, 2010 shows EBAY giving nearly 50% gains, compared to a 40% loss for ^IXIC.

    Despite this discrepancy in final capital gains in the second example, the key is that both securities move in the same direction. EBAY's gains had to do with the stock having much stronger price volatility compared to ^IXIC. Nevertheless, note the same overall direction of movement. Furthermore, observe two shorter time frames:

    1. Sept 23, 2002 -- July 28, 2008. Final gains end up very close, with ^IXIC up 90% and EBAY up about 70%. Once again, ^IXIC and EBAY move in the same direction, though not to the same magnitude. Even EBAY's prominent spike in Dec 2004, and subsequent drops to match ^IXIC by Oct 2006, are mirrored by gentler bumps and dips in the NASDAQ Composite Index. As ^IXIC goes up and down, so does EBAY.

    2. Mar 2, 2009 -- April 15, 2013. EBAY stock shot up nearly 400% with NASDAQ clocking in a relatively anemic 150%. Once again, EBAY stock seems like a close mirror of ^IXIC price movements, with EBAY having more prominent "noise" that magnify return percentages.

    These examples serve to drive home the point that EBAY is a good buy when NASDAQ is undervalued.

    Consider the last five years. Using 50, 100 and 200-day SMAs, note that ^IXIC was significantly below all of those moving averages October 2008 through February 2009. On smaller scales, though using the same SMA values, the index had similar pullbacks in July 2010 and Aug 2011. Each pullback was a good buying opportunity.

    Going back to EBAY analysis in the same time frame, observe how the same story plays out regarding pullbacks under the 50, 100 and 200-day SMAs. The company has shown an ability to weather recessions. An EBAY price drop concurrent with a similar decline in the ^IXIC signals a buying opportunity.

    Note that an EBAY drop below the aforementioned moving averages without a similar ^IXIC drop may be noise or an indicator of near-future price declines of the ^IXIC. Such a drop will very likely spell further EBAY price declines. It is important to remember that there is no apparent hint as to whether eBay stock price leads or follows ^IXIC. Therefore, an entry point into EBAY should be confirmed with ^IXIC and other major indexes. All should be below their respective 50, 100 and 200-day moving averages.

    It may be objected that a single company like EBAY is not as resilient as the NASDAQ Composite Index. Therefore, it could be argued, the index is not a reliable indicator to confirm future eBay stock behavior. One may claim that an EBAY price drop is not a buying opportunity; it may signal long-term decline. This is a point worth considering.

    Due to its size and popularity, eBay has become a cultural phenomenon. Any systemic decline will be noticed and publicized by analysts and professionals in the field. As with (NYSE:JCP) JC Penney's and (NYSE:RSH) Radio Shack's recent forecasts of failure, big companies generate plenty of press, flattering and otherwise. Such warnings will give an investor long on EBAY stock plenty of time to lock in gains.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: AMZN, JCP, RSH, EBAY, long-ideas
    Apr 23 10:47 AM | Link | Comment!
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