Foundry Stock Review November 15, 2013

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November 15th, 2013


Seasons Greetings,

FSR Staff

Minimizing Tesla's Stock Whiplash

Why A Defined Strategy Can Limit Investor Jolt

FSR Staff

Here at Foundry Stock Review, we have a set investment horizon and criteria for profiling and selecting stocks that we feel are undervalued or overvalued. It would be very easy to pick a handful of trading sessions and hammer an opinion across by sighting the trading action of a given day or week or month. It is much more important to stay disciplined and true to your method whether you are a short term trader or long term investor. We are an intermediate term earnings focused newsletter, here to give investors our insights over the next 12 to 18 months. We have an established price target and time horizon for Tesla. We would like to share with you our stock profiles in our monthly investment newsletter by email on the 15th of every month. To request a free copy of our November newsletter contact us at foundrystockreview@live.com. Be sure to inquire about our 2014 subscription packages. If you are trading Tesla day to day, all we can say is good luck and grab some ice, as your neck may continue be sore from following the price action.

Happy Thanksgiving Everyone!

Remember to take this time to enjoy the company of family and friends. The market will always be there but moments like these only come a couple times a year so make the most of them!

FSR Staff

Genius Premium: Jobs vs Musk

What Will It Take for Elon Musk to Meet All-Time Expectations?

Many have compared Telsa's CEO Elon Musk to former Apple CEO Steve Jobs. Both men have been considered innovators, known for possessing superior intelligence,  savvy business acumen, and a rabid following devoutly loyal to their products. How do we put a value on these intangibles?

It may be instructive to see how the market assigns a "genius premium" by analyzing the performance of Apple stock during Steve Jobs second stint at the company from September 1997 until his passing in November 2011. During this 14 year span, Apple stock experienced a gain of about 6800% or 35% per year from a split adjusted price of $5.28 to $365.73.

Elon Musk has seen Tesla climb from its IPO in late June of 2010 from $23.83 to around $135 in early November 2013. This return of about 470% over the first three plus years as a public company has seen his stock charge ahead an average of about 70% per year. This meteroic rise in valuation has partially fueled commentators to draw comparisons between Elon and perhaps the greatest CEO and American company of all-time, Steve Jobs and Apple.

So the question going forward now becomes if there is a "genius premium" to place on Tesla what should it be? It may be difficult to compare cars to iPhones, Samsung to BMW, and car fires to Foxconn incidents but essentially on some level, these questions are worth asking. Was Jobs as valuable to Apple as Musk is to Tesla? Can Tesla achieve 35% annual stock returns for the next ten years years and trade at $1600 a share in 2023? If Musk can grow his capital intensive car companies share price half as quickly, should we expect 17% annual stock returns from Tesla for the next several years and a more dampened stock price of $214.65 in 2023? If competition picks up and Telsa grows share price only 10% per year, maybe the stock will only trade for $90 per share in ten years. A wide range of outcomes with big investor consequences.

Maybe the best takeaway from this exercise is to marvel at how well Jobs executed on his vision and how far Musk and Tesla have to go to fulfill their vision of bringing electric cars to the masses in an exponential way. Big goals, but maybe not unattainable goals for a man who has secured contracts from NASA to send rockets into outer space. 

Is Tesla trading in outer space? Check out our October premium monthly investment newsletter for free today and if you want our newsletter delivered to your inbox on the 15th of every month, check out our subscription packages.

Copyright © 2013 Foundry Stock Review, LLC All rights reserved.

Foundry Stock Review October 15th, 2013

Volume 1, Issue 1

An Ode to Elon

You can invest in Groupon or Pandora,
Or in new versions of our friend Tom at Myspace.
I'll take the guy calling the shots at Tesla,
When he's not sending ships into space.

Ask who will deliver the bottom line,
Do you trust Cook, or Ballmer, or Zuck?
Or do you want a guy whose net worth is heavy in Tesla,
If no one cared about the stock, I'm sure he'd still give a f###.

You can say other CEO's put shareholders first,
But ownership percentage is all I need to see.
For I will invest with Elon Musk for the future,
He is doing for electric cars, what the iPod did for Mp3.

Copyright © 2013 Foundry Stock Review, LLC All rights reserved.

Dunkin' Brands: Growth Expectations Too Sweet?

Growth Plans Overseas Set Ambitious Goal

Dunkin' Brands Group Inc. (DNKN) and its flagship Dunkin' Donuts coffee shops have grand ambitions for conquering the international landscape and North America outside of their highly concentrated Northeastern U.S presence. There are over 500 locations in New York City alone and several hundred in Massachusetts. The firm has a strong presence in the city hubs of the I-95 corridor from Boston to Philadelphia. There are about 7.500 Dunkin' Donuts stores in the U.S. and about 3,200 overseas. Many stoefronts are co-branded with Baskin Robbins ice cream shops, which is featured in 7,000 total locations across the globe.

The company has added Dunkin' Donuts franchises at a fast clip in the US and plans on effectively doubling locations in the US to 15,000 by around 2031. To achieve this goal the company has to open on average 500 stores state-side each year. The last three years has seen Dunkin' add 240 stores in 2011, 291 in 2012, and 357 of a projected 360 stores completed to date in 2013. International expansion has been tagged at 10,000 stores up from 3,000 but no time frame was provided in a late 2011 Businessweek article outlining the initiative. For the sake of projection purposes, to use the domestic 500 store per year build out, it 14 years until 2027 for Dunkin' to reach this goal.  A more tempered 300 overseas annual expansion rate would take 33 years or 2046 to complete.

The main driver of domestic growth for Dunkin' is California. The company will start building stores in full force by the year 2015 to include a goal of 1,000 locations in the Golden State. The main thrust internationally will include Shanghai, China with 100 locations by 2023 and India with 500 locations expected by 2026. The company has not found success in Canada or Japan and will count on building 150 stores in the UK to help its peripheral global expansion efforts set for new regions to include Brazil and Eastern Europe in the future.

Revenues for Dunkin' Brands have ranged from 8.8% growth from in 2011 to 4.8% in 2012 to projected 7.9% growth in 2013. 7.1% sales growth in 2014 is analysts current consensus estimate. Earnings growth is expected to come in around 16-17% in 2014. On the surface Dunkin's international expansion plans appear to be very ambitious at best and far fetched at worst in the next 15 years. At the very least, executing on the domestic expansion strategy may prove challenging at home, where Starbucks has a established foothold on the west coast.

Request a free copy of our investment newsletter Foundry Stock Review including price targets on Dunkin' Brands (DNKN) email us today at foundrystockreview@live.com for a limited time.

Dislosure

Foundry Stock Review and its contributors have no positions in Dunkin Brands' (DNKN) or Starbucks (SBUX) the securities mentioned in this blog as of 11/12/2013. Periodically, Foundry Stock Review or its contributors may initiate a position in a stock covered in this blog. If we do initiate a position in any security we cover prior to publication, we will disclose the position here in our disclosure. This stock disclosure is not a recommendation to purchase or sell any security.

Disclaimer

Foundry Stock Review is an earnings focused investment newsletter. Foundry Stock Review, LLC is not a registered investment advisor and the data contained in this newsletter has been gathered from external sources and is believed to be accurate as of publication. The content of this blog is for information purposes only and is not a solicitation to buy or sell any individual securities. It is important that you consult with your investment advisor and tax advisor before making investment decisions. Past performance is not indicative of future results

Copyright © 2013 Foundry Stock Review, LLC All rights reserved.