Three stocks. And a short paragraph.
Well I will share what I am looking at right now, these are some of the stocks on my watchlist, I will write a sentence on why it is interesting to watch:
**Cava** Recent price is 54. This company share price is being sold off because of 1) cost of living expenses 2) food inflation is expected to be higher because of El Niño. If you use DCF, the value is around $18, if you think this company is following a trajectory of early chipotle (ie. long queues), and will grow into CMG’s 3000 restaurants, then it is worth somewhere between $40 - 60.
**Rollins** Recent price is $34. This wide moat is having an issue because the company missed the nos and the ceo admitted they don’t really know why the walk-in, dial-in, website side of the pest control business was slow last quarter. Analyst thinks ai could be helping homeowners do diy on best control. If this coming quarter is more of the same, the selloff will be continue. If not it will go back up. Their yoy eps growth is around 9-12% a year.
**Yum China** This US-listed master franchisee of KFC, Lavazza, and Pizza Hut company is being sold off because of country risks. What is different now is that Yum Brands has sold off the entire China Pizza Hut biz to Yum China, this means they do not have not have to pay Yum brands USA royalties as they now own the brand. The transaction will be completed this year. And I do expect the margins to continue to improve because of this. Yum China’s pizza biz is small compared to KFC. Strategy wise they are going into tier-2 and tier-3 cities and promoting small format, localised dishes. Their currently outlets will surpass 20,000 I think this year (don’t have my notes with me).
Let me know if you want me to continue with the next three.