Stockchase Opinions

Gordon Reid Dunkin' Brands Group DNKN-Q COMMENT Jun 26, 2019

New openings? His research suggests they are doing extremely well. He is not sure about new openings in the West. It is just like the Tim Horton's brand in Canada. Their success is based on their cheap coffee and customer loyalty.
$79.560

Stock price when the opinion was issued

food services
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TOP PICK
A great buying company. 56 countries. Should track upwards.
DON'T BUY

They were spun out from a private equity firm and so there is quite a bit of debt on their balance sheet. Have done a good job of generating a return through expansion in the mid-west. Prefers THI-T in Canada for the same play.

PAST TOP PICK

(A Top Pick March 20/12. Up 22.41%.) Good and solid. Expanding into Western US.

COMMENT

Likes the company. An impressive business. Has a great market position in the US, similar to what a Tim Hortons (THI-T) might have in Canada. They also own the Baskin-Robbins brand, which has great global growth. Pretty fully valued.

PARTIAL BUY

Tim Hortons (THI-T) or Dunkin’ Brands (DNKN-Q)? This chart shows a lot more stability, but, like Tim Hortons, there is a little bit of pause and usually these pauses get corrected to the upside. If it broke below around $44.50, that would indicate something is wrong. The next support would be around $42. You may want to hedge your bet by taking a half position in both.

DON'T BUY

They have been a fairly attractive, low price provider of ‘junk’ food. There has been a shift in North America toward more healthy eating and they have not gone that way so he would stay away from it. He sees value in SBUX-Q, with 21k stores in 66 countries with a brand as strong as ever.

TOP PICK
It is a similar experience to Tim Horton’s. They are primarily a NE company in the US. They are going to try to roll out nationally with a 1000 stores by the end of 2020. He likes the regional to national play. They are also growing internationally. It is a 100% franchise model. He has an $85 target. Yield 2.0%. (Analysts’ price target is $73.75)
BUY
Today, the New York Times reported that a private entity wants to buy Dunkin'. Some felt that this stock was already overextended, but he disagrees. Their track record in acquisitions is fantastic. It has survived while peers have fallen away.