- (0:30) - Are You An Investor or Speculator?
- (3:15) - Breaking Down High Flying Growth Stocks
- (10:00) - What Kind of Investor Are You?
- (16:15) - Finding Value In Restaurant Stocks: Tracey’s Top Stock Picks
- (30:00) - Episode Roundup: SHAK, CMG, DPZ, SBUX, MCD
Welcome to Episode #153 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, Tracey continues with her series looking at Benjamin Graham’s best-selling book for value investors called “The Intelligent Investor.”
First published in 1949, the last edition by Graham was published in 1973. But in 2003, Jason Zweig, along with a preface by Warren Buffett, updated the book to account for the events of the last 40 years.
Investing or Speculating?
One of the key themes throughout the book is distinguishing between investing and speculating.
Investors are long-term buyers of a company. Fundamentals matter because an investor is buying the earnings, sales and tangible assets of a company.
Speculators are short-term buyers of a company. The chart matters more than what the company does or makes.
Restaurant Stocks: Are you Investing or Speculating?
Taking a look at the top restaurant brands, they have solid earnings and sales growth. Same-store-sales are also positive year-over-year at all of them.
But Graham would ask: “How much” are you paying for those sales and earnings?
1. Shake Shack (SHAK - Free Report) has been one of the big winners this year, as shares have soared 83%. It has double digit sales growth but a forward P/E of 147.
2. Chipotle (CMG - Free Report) has rebounded and is up 84% on the year. It’s back! But it has a forward P/E of 59 with a PEG of 3.2. And it doesn’t pay a dividend.
3. Domino’s (DPZ - Free Report) has been the king of the restaurants the last few years with its double digit same-store-sales comps. But shares are down 1.4% year-to-date and it still trades with a forward P/E of 25.7.
4. Starbucks (SBUX - Free Report) is the comeback kid. After three years of going nowhere, the shares have popped 48% in 2019. What are you willing to pay for sales growth of 6.7% in 2019?
5. McDonald’s (MCD - Free Report) may be the old guy in the group, but shares are up 39.3% over the last year. It pays the highest dividend of these five, with a yield of 2.2%. It has a PEG ratio of 3. But what about growth?
Find out all you need to know about investing versus speculating on this week’s episode.
[In full disclosure, Tracey currently owns shares of SBUX in her personal portfolio.]
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