I thought we would change up things today and take a look at a longterm position. Yesterday, we had a fun day with four new positions. We started the day with a Buy in Crocs Inc. (CROX), which turned out to be good for 4%. We got in on the morning, per my Morning Levels Alert, below our initial range at 12.03 and sold at 12.52 later in the morning. Our Short Sale of the Day scared us for awhile, but we were able to turn a nice 3% profit on Carrizo Oil & Gas (CRZO). We doubled down our position for an
average entry of 22.70 and exited at 22.02 for a solid gain. Our Overnight Trade in Brooks Automation (BRKS) appears to have been killed by the jobs report. We got in at 7.95, and we exited at the open at 8.04 for a 1.25% gain. The company had tremendous earnings, but it appears that it was not good enough to be the jobs report. Finally, we finished things off with a Midterm Trade in Sunpower Corp. (SPWRA).
Looks like a good day to sit back and look long term and avoid the market’s death…We don’t want to be like AOL…
Long Term Investment: Jack in the Box Inc. (JACK)
Thesis
Jack in the Box is one of the leading fast food restaurants in the USA. The company operates a majority of its business in the West Coast. Before the recession, Jack in the Box (JB) appeared to be a company that was poised for tremendous growth as it grew its revenue from 2000 to 2007 75%. Yet, the company has seen a decline in its revenue since the 2007 year. As unemployment has continued to rise, JB has been adversely affected by declining income levels. The company though has differentiated itself from rivals with a unique menu, a growing concept in Qdoba, and an engaging television campaign. As employment returns, Jack in the Box will find itself a severely undervalued company with lots of room for growth.
One of the best reasons to like Jack in the Box is its current undervaluation. The company has a current P/E ratio of just over
10 at 10.73. The industry average is 18.00 with competitors like McDonald’s (MCD), Burger King (BKC), and Yum Brands (YUM) with P/E ratios at 16, 12, and 18 respectively. It is fairly obvious that JB has seen a significant decline in its share price…
