MetroPCS Update (PCS)

Looks like my PCS post turns out to be a good one, at least for the short term.  The market still is was undervaluing this company.  They are sitting on a ton of cash and have the lowest PE in their sector.  Remember this company is and should continue to make a lot of cash to reinvest in the business.  Plus at these low levels they are a prime takeover target.  I could see the takeover going for a least $10 a share!  Much upside in PCS, short and long term buy.  IMHO.  Tony

Wendys (WEN)

Finally my patience with the stock is paying off.  Stay with it for the long haul. Good luck investing.  Tony

MetroPCS (PCS)

This stock is super cheap.  I am now long PCS.  This Article says it all. Tony

June 21, 2012 by: Erik Gholtoghian  |  about: PCS, includes: S, T, VZ Fundamentally, MetroPCS (PCS) is not

the company its stock price would suggest. This may be due to a number of factors, but one of which seems to

be ignorance.

 

Markets are nearly efficient, but in some instances a brand image can overly influence investors' opinion of

a stock. Because MetroPCS has been cast by many cell phone users as an inferior network, many investors

automatically assume the stock itself is also of inferior quality. At this time, neither of those

assumptions is correct.

 

Several years back, MetroPCS did have a fairly low quality network with snail speed Internet. Calls would

occasionally drop. Callers would frequently not hear each other properly, especially deep inside of large

buildings. But even then, the network got the job done and for the correct price, all the while making the

company profit. Since then, call quality on the network has risen dramatically and Internet speed is

sufficient for even every day users. Dropped calls are rather rare, and voice quality on the newest 4G LTE

phones is nearly indistinguishable from carriers like Verizon (VZ), AT&T (T), or Sprint (S).

 

In the future, a network upgrade to VOLTE/VOIP will allow MetroPCS to offer even higher quality voice

services to its users, possibly called HD Voice, and at the same time allow a more efficient use of network

resources and spectrum.

 

All of this excellent financial and technological management has resulted in MetroPCS sitting on nearly $2

billion in cash. Because that cash is likely invested and earning less than 1% per year, and shares are

trading at a large discount, there is an argument that it could be time to finally buy back shares. Common

stock has a built in cost, and in this case that cost is in the neighborhood of 6-7% per year. Meaning, the

cost of equity is higher than the return on cash.

 

 

 

With such a massive war chest and stable business, I believe MetroPCS ought to show the market which company

actually can afford to buy MetroPCS out. And that company is none other than MetroPCS itself.

 

A share buyback would put some of the cash to work and improve company valuation. Profit and equity per

share would rise and liabilities per share would fall.

 

By offering to buy shares at $6.50 per share, using only $400 million of the nearly $2 billion in cash,

MetroPCS could buy back 61 million shares, literally 17% of all shares outstanding, and still have more than

enough money left to fight off the increasing competition and recent slowdown in profit.

 

The future is bright for MetroPCS because other options for that cash exist too. A dividend, a large network

expansion, or a buyout of a smaller company could all be announced. But in the end, a medium sized share

buyback seems to reward investors sufficiently while continuing the company's high rate of growth.

 

For comparative purposes, the chart below shows that Verizon, Sprint, and AT&T have roughly $6 billion, $7

billion, and $2.5 billion in cash, respectively. This means that MetroPCS has nearly as much cash as AT&T, a

company which is valued 95 times higher than MetroPCS.

On the Move

Wendys (WEN) is on the move again.  When will it breakout past the $5.50 a share ceiling?  Once it does look for a big move up towards $7 a share.  I have the patience will I collect 1.8% dividend.  Good luck.  Tony

Insider Buying of Wendys

Insiders in Wendys(WEN) have been buying the stock between 4.53-5.27 a share. Go to Yahoo Finance and see for yourself.  good luck investing. Tony

Wendys (WEN)

Ate at my local Wendys yesterday and damn they make some good burgers!  Now if only their quality food can turn into great earnings for us shareholders things would be perfect.  I still believe in their turnaround.  Our patience should be rewarded.  Good luck investing.  Tony

Good Wendys News

This was posted on Friday, via AP.  Hopefully we will get some follow through when the market recovers on Monday.  Good luck investing.  Tony

NEW YORK (AP) -- Wendy's shares managed to climb Friday while most of the market was falling.
The fast-food chain got a boost after two analysts at Janney Capital Markets upgraded its stock to "buy" from "neutral."
Analysts Mark Kalinowski and Edward Grace gave several reasons for optimism. They predicted that May sales would turn out to be better than expected, and they're hearing more chatter about the chain going private. They also said they're hearing anecdotally that franchisees are getting the financing they need to remodel stores.
Still, theirs is a contrarian view. Of 14 research firms surveyed by FactSet, only Janney and two others list Wendy's as a buy. The rest rate it a hold.
Wendy's Co. is in the middle of reinventing itself, trying to shake customer perceptions that its stores and menu were outdated. It's brought in new executives and separated from Arby's. It's modernizing the restaurants and overhauling the menu. Even so, the chain last month lowered its earnings expectations for the year, citing higher beef costs and weaker-than-expected sales.
A Wendy's spokesman declined to comment on whether the company is considering going private. But the Janney analysts note that it's been a successful path for other fast-food chains. Burger King and CKE Restaurants, which owns Carl's Jr. and Hardee's, were both bought by private investors in 2010. Both recently announced that they plan to go public again. Investors will often buy a company that they believe is struggling, spend a few years shaking it up, and then take it public again when they believe the market will give them a return on their investment.
On Friday afternoon, Wendy's shares were up 7 cents to $4.66. The Dow Jones industrial average was down about 2 percent, and nearly 85 percent of the stocks on the New York Stock Exchange were trading down. McDonald's Corp. was down almost 3 percent.
But even with Friday's boost, Wendy's is still off about 13 percent for the year so far — though the Janney analysts said that meant the stock could be priced right for buyers.
Two other publicly traded restaurant chains, P.F. Chang's China Bistro Inc. and Benihana, announced in May that they plan to go private.

Wendys Bucks Tread

Market goes way down and Wendys (WEN) goes up.  I love when stocks diverge from the general market tread.  Almost always means the stock is about to outperform the market.  We have been riding this one for awhile so time to collect.  Good luck investing.  Tony