Talking Stocks 2.0

[7sins]

What a day for our trades boys, AUPH SABR UP SEATW even BBIG all big green on a red day, great to see small caps outpace large caps and biotech building a base. Nice way to start the weekend, see all of you on Monday, cheers

[AshCashEmAll]

Originally Posted by 7sins

What a day for our trades boys, AUPH SABR UP SEATW even BBIG all big green on a red day, great to see small caps outpace large caps and biotech building a base. Nice way to start the weekend, see all of you on Monday, cheers

SEAT gonna crush this next quarter. First hand I am seeing record sales numbers across the board with all genres in every city. What a time to be in concert sales!


Sent from my iPhone using Tapatalk

[huncho]

Originally Posted by AshCashEmAll

SEAT gonna crush this next quarter. First hand I am seeing record sales numbers across the board with all genres in every city. What a time to be in concert sales!


Sent from my iPhone using Tapatalk

not in seat but could see that for q4 but its a bit sketchy as to where q1/q2 are headed. covid cases are surging like crazy and despite the symptoms being much more mild it's causing chaos in sports and other events will follow. i believe there are 30 players out with covid in the nba right now and 100 in the nfl. i don't think we'll ever lock down again but i feel like we're headed back towards some restrictions. classes and offices are shutting down again so i'm personally not touching any more reopening stocks because it seems like every 6 months we're gonna be going through this. i'm glad coty worked out and i'm still holding but i started that position right before delta hit and felt miserable lol

also 95% certain i got covid again this week (had it in march 2020)

[HippoPAPAmus]

Originally Posted by huncho

not in seat but could see that for q4 but its a bit sketchy as to where q1/q2 are headed. covid cases are surging like crazy and despite the symptoms being much more mild it's causing chaos in sports and other events will follow. i believe there are 30 players out with covid in the nba right now and 100 in the nfl. i don't think we'll ever lock down again but i feel like we're headed back towards some restrictions. classes and offices are shutting down again so i'm personally not touching any more reopening stocks because it seems like every 6 months we're gonna be going through this. i'm glad coty worked out and i'm still holding but i started that position right before delta hit and felt miserable lol

also 95% certain i got covid again this week (had it in march 2020)

Feeling very deja by out there.

Get well soon!


Sent from my iPhone using Tapatalk

[chsu74]

Originally Posted by huncho

not in seat but could see that for q4 but its a bit sketchy as to where q1/q2 are headed. covid cases are surging like crazy and despite the symptoms being much more mild it's causing chaos in sports and other events will follow. i believe there are 30 players out with covid in the nba right now and 100 in the nfl. i don't think we'll ever lock down again but i feel like we're headed back towards some restrictions. classes and offices are shutting down again so i'm personally not touching any more reopening stocks because it seems like every 6 months we're gonna be going through this. i'm glad coty worked out and i'm still holding but i started that position right before delta hit and felt miserable lol

also 95% certain i got covid again this week (had it in march 2020)

Feel better and stay well!

[jaisonline]

Originally Posted by huncho

not in seat but could see that for q4 but its a bit sketchy as to where q1/q2 are headed. covid cases are surging like crazy and despite the symptoms being much more mild it's causing chaos in sports and other events will follow. i believe there are 30 players out with covid in the nba right now and 100 in the nfl. i don't think we'll ever lock down again but i feel like we're headed back towards some restrictions. classes and offices are shutting down again so i'm personally not touching any more reopening stocks because it seems like every 6 months we're gonna be going through this. i'm glad coty worked out and i'm still holding but i started that position right before delta hit and felt miserable lol

also 95% certain i got covid again this week (had it in march 2020)

Hope you feel better Huncho. I lost my relatively young stepfather to Covid in March 2021. He was in the queue for the vaccine & couldn’t get an anti-body treatment. Lucky, we have far better meds today for it.

I also have a kinda bad feeling about SEAT & other event platforms for at least the next 2 quarters. I did trim my $1.64 warrants for $3.22 (about 20% of my position). Just in the last 3 weeks, the wife is seeing more hospital beds being used, more patients testing positive, some NBA & NHL teams are now requiring proof of vax & now leagues are rescheduling teams. Definitely making me a tad ‘worried’ about my DKNG position with upcoming NCAA FB Bowls, NFL playoffs, & March Madness. I started adding more DKNG every few days when it hit $38.

[huncho]

Originally Posted by HippoPAPAmus

Feeling very deja by out there.

Get well soon!


Sent from my iPhone using Tapatalk

Originally Posted by chsu74

Feel better and stay well!

thanks guys, still waiting on the result but so far just cold like symptoms so i'll be ok

Originally Posted by jaisonline

Hope you feel better Huncho. I lost my relatively young stepfather to Covid in March 2021. He was in the queue for the vaccine & couldn’t get an anti-body treatment. Lucky, we have far better meds today for it.

I also have a kinda bad feeling about SEAT & other event platforms for at least the next 2 quarters. I did trim my $1.64 warrants for $3.22 (about 20% of my position). Just in the last 3 weeks, the wife is seeing more hospital beds being used, more patients testing positive, some NBA & NHL teams are now requiring proof of vax & now leagues are rescheduling teams. Definitely making me a tad ‘worried’ about my DKNG position with upcoming NCAA FB Bowls, NFL playoffs, & March Madness. I started adding more DKNG every few days when it hit $38.

thanks, and sorry to hear that, i lost my dad in march 2020 as part of the first wave that hit nyc. also young (58) and had no existing health conditions but like you said we're much better prepared now

will be interesting to see how sports leagues proceed because as far as vaccines go they've done all they were supposed to, i believe the nfl is like 95% vaccinated and the nba is even higher so it's a bit disheartening that it feels like that week the nba shut down last year

[7sins]

Originally Posted by AshCashEmAll

SEAT gonna crush this next quarter. First hand I am seeing record sales numbers across the board with all genres in every city. What a time to be in concert sales!


Sent from my iPhone using Tapatalk

Great insight Ash, thank you as always. What are you seeing for 2022 ticket sales, from what I have been reading, there is a record number of artists looking to tour and make up for generating no revenue the last two years?

Whatsthetime, are you seeing something similar in your ticket sales too?

SEAT looks great here, was hoping to add if warrants dipped below $2 but looks like we are rebounding, wish we had more volume to push this higher.

Originally Posted by huncho

not in seat but could see that for q4 but its a bit sketchy as to where q1/q2 are headed. covid cases are surging like crazy and despite the symptoms being much more mild it's causing chaos in sports and other events will follow. i believe there are 30 players out with covid in the nba right now and 100 in the nfl. i don't think we'll ever lock down again but i feel like we're headed back towards some restrictions. classes and offices are shutting down again so i'm personally not touching any more reopening stocks because it seems like every 6 months we're gonna be going through this. i'm glad coty worked out and i'm still holding but i started that position right before delta hit and felt miserable lol

also 95% certain i got covid again this week (had it in march 2020)

Huncho how are you feeling brother? Hopefully better?

[AshCashEmAll]

Originally Posted by 7sins

Great insight Ash, thank you as always. What are you seeing for 2022 ticket sales, from what I have been reading, there is a record number of artists looking to tour and make up for generating no revenue the last two years?

Whatsthetime, are you seeing something similar in your ticket sales too?

SEAT looks great here, was hoping to add if warrants dipped below $2 but looks like we are rebounding, wish we had more volume to push this higher.

Most of my sales in the last 3 months were for shows in 2022. What’s actually happening right now is that a lot of artists are fighting over dates and venues for their tours so I expect that the lineup for live entertainment will be stacked till 2023. When shows sell out on the primary marketplace such as Ticketmaster, live nation , etc… is when SEAT benefits most. So if you think about it the fact that these shows taking place are selling out immediately this early on means that SEAT has the most to benefit leading up to event dates. IMO based off of data from myself and others in my circle I expect a good surprise for SEAT on the next earnings.


Sent from my iPhone using Tapatalk

[What’s The Time]

We’ve broken our single day sales record twice this month. Easily surpassed our record quarter with the rest of the month to spare. Most of the tickets we are selling are for tours in 2022 with plenty of room for new tours to be announced. This should come once the new year begins as it’s generally quiet around this time aside from Bowl games.

A little worrisome that some sporting events are happening without fans and a few concerts being cancelled here and there. De Blasio’s announcement that concerts will proceed in NYC over the holidays and New Year gives me assurance that things will be okay. Also, sales have not been slowing which shows a lack of fear from the consumer’s standpoint.

As far as Q4 earnings goes, be ready for incredible results. As far as Q1 2022 onward goes, a major shutdown is the only thing standing in the way of our success.

[huncho]

Originally Posted by 7sins

Great insight Ash, thank you as always. What are you seeing for 2022 ticket sales, from what I have been reading, there is a record number of artists looking to tour and make up for generating no revenue the last two years?

Whatsthetime, are you seeing something similar in your ticket sales too?

SEAT looks great here, was hoping to add if warrants dipped below $2 but looks like we are rebounding, wish we had more volume to push this higher.



Huncho how are you feeling brother? Hopefully better?

yeah all good now. i tested negative on the pcr test 2 days after getting symptoms but 3 of my friends tested positive. regardless though, whatever it was, it was pretty mild and only had symptoms for 2 days. thought it had to be covid but who knows what it was

[MrGoat]

Originally Posted by huncho

yeah all good now. i tested negative on the pcr test 2 days after getting symptoms but 3 of my friends tested positive. regardless though, whatever it was, it was pretty mild and only had symptoms for 2 days. thought it had to be covid but who knows what it was

Great news!!


Sent from my Apple privacy invasion product

[HippoPAPAmus]

Originally Posted by huncho

yeah all good now. i tested negative on the pcr test 2 days after getting symptoms but 3 of my friends tested positive. regardless though, whatever it was, it was pretty mild and only had symptoms for 2 days. thought it had to be covid but who knows what it was

Glad to hear it!


Sent from my iPhone using Tapatalk

[7sins]

Originally Posted by AshCashEmAll

Most of my sales in the last 3 months were for shows in 2022. What’s actually happening right now is that a lot of artists are fighting over dates and venues for their tours so I expect that the lineup for live entertainment will be stacked till 2023. When shows sell out on the primary marketplace such as Ticketmaster, live nation , etc… is when SEAT benefits most. So if you think about it the fact that these shows taking place are selling out immediately this early on means that SEAT has the most to benefit leading up to event dates. IMO based off of data from myself and others in my circle I expect a good surprise for SEAT on the next earnings.


Sent from my iPhone using Tapatalk

Originally Posted by What’s The Time

We’ve broken our single day sales record twice this month. Easily surpassed our record quarter with the rest of the month to spare. Most of the tickets we are selling are for tours in 2022 with plenty of room for new tours to be announced. This should come once the new year begins as it’s generally quiet around this time aside from Bowl games.

A little worrisome that some sporting events are happening without fans and a few concerts being cancelled here and there. De Blasio’s announcement that concerts will proceed in NYC over the holidays and New Year gives me assurance that things will be okay. Also, sales have not been slowing which shows a lack of fear from the consumer’s standpoint.

As far as Q4 earnings goes, be ready for incredible results. As far as Q1 2022 onward goes, a major shutdown is the only thing standing in the way of our success.

Thank you for sharing boys, your contributions and insight into ticketing sales are always appreciated. Wonderful 19% movement in the warrants today, I will look to opportunistically add before next ER based on your comments, roughly 7 weeks away. Hopefully will get another chance to add. Marching back past $3 shortly, just need vol to pickup.

Originally Posted by huncho

yeah all good now. i tested negative on the pcr test 2 days after getting symptoms but 3 of my friends tested positive. regardless though, whatever it was, it was pretty mild and only had symptoms for 2 days. thought it had to be covid but who knows what it was

Glad to hear you are okay

[huncho]

Originally Posted by MrGoat

Great news!!


Sent from my Apple privacy invasion product

Originally Posted by HippoPAPAmus

Glad to hear it!


Sent from my iPhone using Tapatalk

Originally Posted by 7sins

Glad to hear you are okay

thank you all

today was a pretty great day across the board. maybe a bit of a turn around and we actually get a rally? lol

[CoveWatch]

Originally Posted by huncho

yeah all good now. i tested negative on the pcr test 2 days after getting symptoms but 3 of my friends tested positive. regardless though, whatever it was, it was pretty mild and only had symptoms for 2 days. thought it had to be covid but who knows what it was

Happy to hear


I’ve gotten out of SEAT to throw into AUPH but with q4 earnings set to hit over the next few months, I am looking for another entry.

[7sins]

Interesting article below on travel recovery and strength of the consumer, as I have been pointing out with tsa travel numbers, looks like they are almost back in line with 2019 and certainly well ahead of 2020.

Interesting comments on Boeing/BA, that has gotten beaten down this year. Trading near $200, low YTD at $186, and I suspect good upside as not only travel resumes but also 737/787 issues are in the past. Option chain pretty attractive at jan 2023 $200 and jan 2024 $250, I am going to further research but something to note for those who want to do their own DD. Will post if I end up pulling the trigger.



Wednesday, December 22, 2021

People still want to roam, and Big Pharma can help
The Omicron variant of COVID-19 is swamping the U.S. and creating lots of market volatility in its wake. Meanwhile, the efficacy of vaccines is being called into question, and 2022 already appears to be starting on a bad note — even though it’s still more than a week away.

Yet, there’s still hope emanating from an unlikely place: travel, the sector most vulnerable to the vagaries of the pandemic, but one that’s held up surprisingly well under the current waves of infections.

And one fairly bullish call on Boeing (BA) crystallizes a few key reasons why grim headlines about COVID-19, big airlines cutting routes — and very unruly passengers that have stressed out pilots and crew members — should be put into necessary context.

Citing a Bank of America analysis, Yahoo Finance’s Thomas Hum wrote on Tuesday that while international travel is still weak, there’s “not much [of an] Omicron effect” on domestic travel. The latest COVID variant is rattling the public, yet Transportation Security Administration data shows that holiday travel is flirting with pre-pandemic highs.

As of Monday, TSA checkpoints are processing more than twice as many travelers as the comparable period in 2020, and closing in on 2019’s numbers.

Digging into the numbers, Hum reported that carriers including Delta (DAL), American (AAL), United (UAL) “all saw sizable increases in website visits — U.S. airlines’ trailing seven-day site visits grew 15% for the week ending Dec. 14 compared to 7% last week.”

All of that speaks to the “living with the virus ethos” ameliorating the worst ravages of the pandemic, and why most states and localities are (at least for the moment) erring on the side of allowing citizens to move freely around the country.

Not to be outdone, CFRA Research on Tuesday reiterated a “Strong Buy” on Boeing. To recap, the beleaguered aerospace giant spent most of 2019 containing the fallout from its grounded 737 Max flagship plane, then struggled to stay afloat last year as the pandemic and 737 Max crisis hammered its bottom line. Meanwhile, technical issues associated with its 787 have hampered deliveries.

Colin Scarola, CFRA’s senior equity analyst, thinks the company still has some challenges ahead. However, “things should be drastically better for Boeing in one year, just as they are so much better now versus one year ago.There will likely be plenty of good news by the end of 2022, leaving the company in a much better place by next year's end.”

The next part is where Big Pharma comes in. Pfizer (PFE) is likely to receive regulatory approval for a new at-home COVID drug that, in combination with vaccines, will help reduce fatalities and hospitalizations. That will bring “COVID-19 deaths in line with a typical flu, allowing offices to reopen and international travel restrictions to drop.”

Connecting the dots, rebounding air traffic will boost demand for Boeing’s planes, and see passenger levels return to or even exceed pre-pandemic water mark.

A win for modern science, free markets, and freedom of movement — all in one aggressive stock call.

[jaisonline]

Anyone else throw a few dollars at SEAC last week while it was trading around $1.25? I cashed out today at $2.74.

I tried Triller last night. Very weak so far with popular accounts / users.

Triller CEO also bumbled when asked around user calculation posted. He also mentioned being a platform for people gated outside of other ones.

[huncho]

Originally Posted by jaisonline

Anyone else throw a few dollars at SEAC last week while it was trading around $1.25? I cashed out today at $2.74.

I tried Triller last night. Very week so far with popular accounts / users.

edit nvm : read seat but you meant seac lol

isn't triller also valued around the same as lomotif/bbig merger was? i wonder if that'll give bbig a move up

[AshCashEmAll]

Is triller the same company that did a terrible job at broadcasting the Jake Paul fight vs Ben askren ?


Sent from my iPhone using Tapatalk

[7sins]

What is this!? Back to back to back green days! For all of us in AUPH, great sign here looking at short interest, almost at historic lows which means most shorts are covered - also explains the very low borrowing cost. That is a 60% short covering in 1 month! Hope some of you got in near the recent $17 lows, cruising past $23 today. Nice day across the board, hope everyone enjoys their holiday weekend!

[RBradleigh]

Can anyone here (7sins?) give me your thoughts on Dutch Bros BROS? I live in the Seattle area and here in the PacNW they have a cult following. There business model is more drive up kiosk than brick and mortar.

Brand awareness locally is high but unlike SBUX you will not find them inside the neighborhood Target or grocery store.

Their workforce appears to be much younger than SBUX which to me means likely lower wages which could offset the loss in scale economies with the mermaid.

And most important, it amazes me how people are willing to wait 20min in their car for a $6 cup of coffee.

Thank you,


Sent from my iPhone using Tapatalk

[7sins]

Originally Posted by RBradleigh

Can anyone here (7sins?) give me your thoughts on Dutch Bros BROS? I live in the Seattle area and here in the PacNW they have a cult following. There business model is more drive up kiosk than brick and mortar.

Brand awareness locally is high but unlike SBUX you will not find them inside the neighborhood Target or grocery store.

Their workforce appears to be much younger than SBUX which to me means likely lower wages which could offset the loss in scale economies with the mermaid.

And most important, it amazes me how people are willing to wait 20min in their car for a $6 cup of coffee.

Thank you,


Sent from my iPhone using Tapatalk

I took a quick look under the hood to give my perspective on BROS, note full disclosure, not financial advice and I do not have any underlying or derivative positions in it. Below are a few thoughts I have, to summarize, I think you have good long term growth here, however looking at the current P/S and forward P/E, I would argue that it will be a bumpy ride as the stock needs to grow into its rich multiples. Thus they will need to execute on their expansion program which means they will likely need to take on more debt and in the short run, the stock could face volatility especially if rates rise and investors look to trim highly priced growth stocks. And of course, any apprehension one might have buying a stock with the ticker BROS

Option IV here is very high, if you were to invest, I think you are better off buying the underlying stock and write covered calls to take advantage of the high IV and reduce your cost basis, easy trade there. If you are looking for a short term trade, this isn't it, if you can have a longer time horizon and mitigate short term volatility, I think it will be a good longer term trade, be SELECTIVE on entry points and add when the market dips.

Looking at the prospectus, lockup expiration is in March. If you were to make a position, I always advise to not jump two feet in. Start a position and average down should the price go lower, this will help with your cost basis along with the aforementioned covered calls. I think there will be multiple buying opportunities in this next year, even with the stock trading around average analyst targets - note MS says fair value is $57.


1st chart: Quick look here at fundamentals, forward P/E is 157, that is very high as I eluded to earlier, you are paying up for future growth here, especially with a 17 P/S which is VERY high for a consumer cyclical stock. I would note a few positives like the high 48% institutional ownership and Sales growth continues to grow, noted the large decreases in EPS Y/Y which I suspect is related to opex spending.

2nd chart: Taking a deeper dive, ttm rev is only 445M, profit margin at 2.89% and operating margin of -24.7%. Again not ideal but growing pains you would expect. Note they have over 111M in debt which equates to a subpar current ratio. There is no deep value trade here, you are paying up for their long term growth, which if they can sustain, you will make money. However in a risk off market, this will have a much higher Beta aka sell off more in a down market. One more thing to note is the low float of only 35M shares, this IMO is a positive and thus heightened interest can easily move the stock quickly. This does not include future dilutions, which are common for high growth companies looking to quickly scale.

3rd chart: You can see indexed monthly sales at BROS continuing to ramp up as their expansion grows. Between September 2019 and September 2021, Dutch Bros sales grew 109 percent.

4th chart: Dutch Bros sales growth was primarily driven by significant sales increases in established markets, but newer markets like Texas are also contributing to growth. Additionally I think an untapped market as they move East where they have little presence.

5th chart: As you eluded to, prices and total spend at BROS is high, almost inline with SBUX.

6th chart: Analyst price targets, trading currently mostly inline with PTs.

7th chart: This is what I was eluding to earlier, you can see the store growth here, remember it costs money for these buildouts which can cause short term debt challenges but creates long term growth. Note this is from their S1.

Final Verdict: Just my .02 with change to give, I think this is a great long term play that will face short term valuation challenges. It isn't screaming buy at these levels, I think you can find better entry points on future market dips. If you can give this a multi-year time horizon I believe it will be profitable as it is quickly scaling their store and revenue growth.

[MrGoat]

Originally Posted by 7sins

I took a quick look under the hood to give my perspective on BROS, note full disclosure, not financial advice and I do not have any underlying or derivative positions in it. Below are a few thoughts I have, to summarize, I think you have good long term growth here, however looking at the current P/S and forward P/E, I would argue that it will be a bumpy ride as the stock needs to grow into its rich multiples. Thus they will need to execute on their expansion program which means they will likely need to take on more debt and in the short run, the stock could face volatility especially if rates rise and investors look to trim highly priced growth stocks. And of course, any apprehension one might have buying a stock with the ticker BROS

Option IV here is very high, if you were to invest, I think you are better off buying the underlying stock and write covered calls to take advantage of the high IV and reduce your cost basis, easy trade there. If you are looking for a short term trade, this isn't it, if you can have a longer time horizon and mitigate short term volatility, I think it will be a good longer term trade, be SELECTIVE on entry points and add when the market dips.

Looking at the prospectus, lockup expiration is in March. If you were to make a position, I always advise to not jump two feet in. Start a position and average down should the price go lower, this will help with your cost basis along with the aforementioned covered calls. I think there will be multiple buying opportunities in this next year, even with the stock trading around average analyst targets - note MS says fair value is $57.


1st chart: Quick look here at fundamentals, forward P/E is 157, that is very high as I eluded to earlier, you are paying up for future growth here, especially with a 17 P/S which is VERY high for a consumer cyclical stock. I would note a few positives like the high 48% institutional ownership and Sales growth continues to grow, noted the large decreases in EPS Y/Y which I suspect is related to opex spending.

2nd chart: Taking a deeper dive, ttm rev is only 445M, profit margin at 2.89% and operating margin of -24.7%. Again not ideal but growing pains you would expect. Note they have over 111M in debt which equates to a subpar current ratio. There is no deep value trade here, you are paying up for their long term growth, which if they can sustain, you will make money. However in a risk off market, this will have a much higher Beta aka sell off more in a down market. One more thing to note is the low float of only 35M shares, this IMO is a positive and thus heightened interest can easily move the stock quickly. This does not include future dilutions, which are common for high growth companies looking to quickly scale.

3rd chart: You can see indexed monthly sales at BROS continuing to ramp up as their expansion grows. Between September 2019 and September 2021, Dutch Bros sales grew 109 percent.

4th chart: Dutch Bros sales growth was primarily driven by significant sales increases in established markets, but newer markets like Texas are also contributing to growth. Additionally I think an untapped market as they move East where they have little presence.

5th chart: As you eluded to, prices and total spend at BROS is high, almost inline with SBUX.

6th chart: Analyst price targets, trading currently mostly inline with PTs.

7th chart: This is what I was eluding to earlier, you can see the store growth here, remember it costs money for these buildouts which can cause short term debt challenges but creates long term growth. Note this is from their S1.

You are a wealth of knowledge and an asset to our little community here!! Thank you for all of your research and opinions!!


Sent from my Apple privacy invasion product

[RBradleigh]

Originally Posted by 7sins

I took a quick look under the hood to give my perspective on BROS, note full disclosure, not financial advice and I do not have any underlying or derivative positions in it. Below are a few thoughts I have, to summarize, I think you have good long term growth here, however looking at the current P/S and forward P/E, I would argue that it will be a bumpy ride as the stock needs to grow into its rich multiples. Thus they will need to execute on their expansion program which means they will likely need to take on more debt and in the short run, the stock could face volatility especially if rates rise and investors look to trim highly priced growth stocks. And of course, any apprehension one might have buying a stock with the ticker BROS

Option IV here is very high, if you were to invest, I think you are better off buying the underlying stock and write covered calls to take advantage of the high IV and reduce your cost basis, easy trade there. If you are looking for a short term trade, this isn't it, if you can have a longer time horizon and mitigate short term volatility, I think it will be a good longer term trade, be SELECTIVE on entry points and add when the market dips.

Looking at the prospectus, lockup expiration is in March. If you were to make a position, I always advise to not jump two feet in. Start a position and average down should the price go lower, this will help with your cost basis along with the aforementioned covered calls. I think there will be multiple buying opportunities in this next year, even with the stock trading around average analyst targets - note MS says fair value is $57.


1st chart: Quick look here at fundamentals, forward P/E is 157, that is very high as I eluded to earlier, you are paying up for future growth here, especially with a 17 P/S which is VERY high for a consumer cyclical stock. I would note a few positives like the high 48% institutional ownership and Sales growth continues to grow, noted the large decreases in EPS Y/Y which I suspect is related to opex spending.

2nd chart: Taking a deeper dive, ttm rev is only 445M, profit margin at 2.89% and operating margin of -24.7%. Again not ideal but growing pains you would expect. Note they have over 111M in debt which equates to a subpar current ratio. There is no deep value trade here, you are paying up for their long term growth, which if they can sustain, you will make money. However in a risk off market, this will have a much higher Beta aka sell off more in a down market. One more thing to note is the low float of only 35M shares, this IMO is a positive and thus heightened interest can easily move the stock quickly. This does not include future dilutions, which are common for high growth companies looking to quickly scale.

3rd chart: You can see indexed monthly sales at BROS continuing to ramp up as their expansion grows. Between September 2019 and September 2021, Dutch Bros sales grew 109 percent.

4th chart: Dutch Bros sales growth was primarily driven by significant sales increases in established markets, but newer markets like Texas are also contributing to growth. Additionally I think an untapped market as they move East where they have little presence.

5th chart: As you eluded to, prices and total spend at BROS is high, almost inline with SBUX.

6th chart: Analyst price targets, trading currently mostly inline with PTs.

7th chart: This is what I was eluding to earlier, you can see the store growth here, remember it costs money for these buildouts which can cause short term debt challenges but creates long term growth. Note this is from their S1.

Final Verdict: Just my .02 with change to give, I think this is a great long term play that will face short term valuation challenges. It isn't screaming buy at these levels, I think you can find better entry points on future market dips. If you can give this a multi-year time horizon I believe it will be profitable as it is quickly scaling their store and revenue growth.

@7sins: thank you so much for the reply and nuggets of info. I know little which is to say zero of short-term trades and options so was in fact looking along the lines as a long-term play. But I will now lookup what an Option IV is as well as give myself a refresher on the various ratios you mentioned ie Current. I think I remember this as being a measure of liquidity but it’s been quite a while since I took my Finance & Acctg classes. S1? I’ll have to lookup that as well, company prospectus / financial report is that the 10k?

And yes, I know this is what’s meant with the “Do your own DD” comments in this thread.

Again thank you for the taking the time out to help a novice :)

Happy New Year,

Russell


Sent from my iPhone using Tapatalk

[hkuo]

Just to confirm, the stock market will be open tomorrow but close at 2pm ET?

[7sins]

Originally Posted by MrGoat

You are a wealth of knowledge and an asset to our little community here!! Thank you for all of your research and opinions!!


Sent from my Apple privacy invasion product

That is very kind of you, thank you! I believe firmly in paying it forward and helping others where I can, hope my 15+ years of being a financial consultant and sharing my experiences, can at least enable others to be more intellectually curios in the stock market.

Originally Posted by hkuo

Just to confirm, the stock market will be open tomorrow but close at 2pm ET?

Full trading day tomorrow, bond market closes early at 2PM.

[7sins]

Originally Posted by RBradleigh

@7sins: thank you so much for the reply and nuggets of info. I know little which is to say zero of short-term trades and options so was in fact looking along the lines as a long-term play. But I will now lookup what an Option IV is as well as give myself a refresher on the various ratios you mentioned ie Current. I think I remember this as being a measure of liquidity but it’s been quite a while since I took my Finance & Acctg classes. S1? I’ll have to lookup that as well, company prospectus / financial report is that the 10k?

And yes, I know this is what’s meant with the “Do your own DD” comments in this thread.

Again thank you for the taking the time out to help a novice :)

Happy New Year,

Russell


Sent from my iPhone using Tapatalk

As you venture down the road of options, I HIGHLY recommend to open a virtual account where you can practice your option trades with fake money until you feel comfortable. Visit tastytrade.com, they have plenty of free beginner option trading videos. I also wrote two option overview guides here on TRF that you can read here:
https://www.rolexforums.com/showpost...postcount=6217
https://www.rolexforums.com/showthre...e#post11228683

Those will help with my aforementioned references of OI and the sort.

Current ratio is important when you think about the weight of a company's debt load. The lower the current ratio the more stress the company has on paying back debt holders. This can be extremely concerning as this can possibly lead to the bonds being downgraded (if this happens, bond prices move down and the cost to borrow capital goes higher) and or could mean the company has to issue more shares which can be dilutive to shareholders. IMO, less of a concern for BROS since they are rapidly growing and spending money on OpEx but for companies with slow to no growth, it is something to take into consideration. Should aim for a current ratio of 1 or higher, this is dependent on the company and sector as well.

A S1 is a SEC registration that is usually filed when a company goes public, I like to read through these to better learn the company and their financials. A 10K is the company's annual reports. An 8K is a SEC report that is filed when an unexpected or meaningful event or company change happens. People often don't read any of the above but I do recommend, for any company you are invested in, you ALWAYS read any 8Ks released.

You want to use the SEC EDGAR website, you can put in the ticker and see all the filings, very handy tool and search function. https://www.sec.gov/edgar/searchedga...anysearch.html

[hkuo]

Thanks 7sins!

[BroncoOne]

Originally Posted by MrGoat

You are a wealth of knowledge and an asset to our little community here!! Thank you for all of your research and opinions!!


Sent from my Apple privacy invasion product

This is an excellent analysis by 7sins and I fully agree (disclosure: I am long this stock and others in the QSR segment). It is fully priced and the growth story is what is driving this stock.

It is eerily similar to Dunkin, which was taken private at a huge premium over what it IPO’d in 2011 ( from around $19 to,over $106 and paying dividends the whole time)

The biggest difference is that Dunkin has been 100% franchised, thus being a compounding value stream of cash to its shareholders while its franchisees paid 100% of the cap ex to grow the brand out of its northeast US fortress. This is commonly known as an “asset lite” model and there is much to be said for it. The strategy was a winner, as evidenced by what happened to the stock and the large growth of the brand across the US and overseas. ( I was also long DNKN)

BROS has franchised but now announced that it wants only company owned stores going forward ( sort of like SBUX I am also long that stock). This may be a mistake but the good news is that BROS already has an existing franchise system and can easily pivot back to it. They can do it broadly or even selectively in a specific market.

Franchising has seem huge consolidation both on the franchisors and franchisee side. Mega franchisees owning hundreds (even over 1000j of franchises of the same and even different brands across multiple states have emerged and are becoming common to the industry. . BROS could tap one of them to build out a market or even a whole state where that franchisee is already established to build out a network.

The big challenge is that these new markets BROS want to go to aren’t green fields. There are hugely formidable competitors there already to compete with for customers and sites. Names like the aforementioned SBUX, Dunkin, MCD and others. MCD, and particularly Dunkin, have very wealthy and sophisticated franchisees that will have the knives out for BROS. Look at what they did to Tim Hortons when they tried to expand beyond US markets that are close to the Canadian border. I see that as the biggest risk.

Another part of the good story if you buy right is that they sell mostly beverages. That is a VERY high margin business and requires smaller retail footprints, helping with costs. They also have, as noted, a very devoted following in their core markets, also like Dunkin.