tag:blogger.com,1999:blog-2149523431587168680.post7225405243852548876..comments2024-01-16T00:12:23.220-05:00Comments on Oddball Stocks: Cheaper than a burrito, Mexican RestaurantsNate Tobikhttp://www.blogger.com/profile/05660387777171986124noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-2149523431587168680.post-58664294856811850842017-05-23T12:27:28.699-04:002017-05-23T12:27:28.699-04:00At the very tip of Mexico's Baja Peninsula, al...At the very tip of Mexico's Baja Peninsula, along the coast where Sea of Cortez meets the Pacific, lies the Las Ventanas al Paraiso. <a href="https://www.restaurantlistings.com/restaurants/AZ/Phoenix/mexican" rel="nofollow">phoenix Mexican restaurant</a><br />The resorthttps://www.blogger.com/profile/03241853177068357153noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-36238771277858560392012-12-24T15:53:06.054-05:002012-12-24T15:53:06.054-05:00Nate:
I am a shareholder in this one, and have be...Nate:<br /><br />I am a shareholder in this one, and have been for years.<br /><br />I am based in the Houston area, and have been to several of their locations. I have been to the annual shareholder meeting.<br /><br />The franchised locations are primarily "Casa Ole", none of the "Mission Burritos" are franchised. They have stated that they will do this if they can the concept down. Some of these locations have been successful and and a couple have been bad.<br /><br />They are definitely NOT returning cash to shareholders at this point. Management is AGGRESSIVELY paying down bank debt. If you look at the capital structure of this company, you will see that it has TREMENDOUSLY de-leveraged over the past few years.<br /><br />This is one of the CHEAPEST stocks that I ever had the privilege to invest in. At less than $.50/share, I wish I could buy the whole company.<br /><br />Look at the Price to sales metric, price to book, EV/EBIDTA and you will see it is a very cheap stock.<br /><br />Imagine if they can improve results somewhat...If they can get their NET margin on sales to 3%, you could be looking at a stock with a P/E of just over 1.<br /><br />As to book value, I STRONGLY suspect it is UNDERSTATED.<br /><br />We'll see...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-51445266874821286322012-12-02T16:11:29.328-05:002012-12-02T16:11:29.328-05:00Looking at the latest annual report, the net pp&am...Looking at the latest annual report, the net pp&e was 13 million. They sold 48,794 of assets for proceeds of 5,610. That would imply that the assets are worth about 11% of the carrying cost. If you knock 90% off the pp&e balance, then BV goes negative. <br /><br />Kevinnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-42631210849674126332012-12-02T14:23:00.387-05:002012-12-02T14:23:00.387-05:00We're thinking alike on this one, nice run rat...We're thinking alike on this one, nice run rate even with the dumpy stores. The company has been closing stores over the past few years, so as those run off earnings could improve more.<br /><br />Due to the squishy nature of book value, and the uncertainty of earnings this falls into what Graham would call an intelligent speculation. There is a solid basis for a reasonable speculation, but it doesn't necessarily classify as an 'investment'.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-58070224779857907802012-12-02T14:21:21.466-05:002012-12-02T14:21:21.466-05:00That is the $64,000 question, I would hope they do...That is the $64,000 question, I would hope they don't re-invest it because at this point they've shown they aren't very good at creating profitable restaurants. If they returned it to shareholders this could become very interesting.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-42147121639273257572012-12-02T14:20:08.399-05:002012-12-02T14:20:08.399-05:00They have 52 company owned locations and 13 franch...They have 52 company owned locations and 13 franchised locations. I don't know where they want to head in the future, but if they can get the franchising right they can do well.<br /><br />I believe the franchise locations are burrito outlets in strip malls similar to Moes or Chipotle.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-50482304006446281962012-12-02T14:19:17.273-05:002012-12-02T14:19:17.273-05:00Good points on leasehold improvements, I agree the...Good points on leasehold improvements, I agree the trinkets on the walls are worthless, but I'd think there is at least some value in the kitchen and dining room equipment, the cash registers etc.<br /><br />The company is barely profitable, and I agree there are a lot of underperforming stores, management has been dropping them as leases expire, which to me is a good sign.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-58090106150392321452012-12-02T14:13:11.679-05:002012-12-02T14:13:11.679-05:00Thanks Nate. Reminds me of Sardar Biglari. Took ...Thanks Nate. Reminds me of Sardar Biglari. Took a controlling position in Western Sizzler about 10 years ago. <br />About 40 company locations could eventually be franchised. <br />The 64,000 dollar question (since none of us are in a position to do what Biglari did) is what will management do with the excess cash flows? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-5116863010581814952012-12-02T11:10:29.215-05:002012-12-02T11:10:29.215-05:00How many stores are franchised? Is the franchisee ...How many stores are franchised? Is the franchisee model their go-forward business plan? <br /><br />Franchising can be a great business if they are effective at marketing to and training new franchisees as it's a capital-light business model.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-21774613449574648962012-12-01T18:21:12.214-05:002012-12-01T18:21:12.214-05:00I don't know if they look cheap if you look at...I don't know if they look cheap if you look at a liquidation, but they are on pace to earn $1 M this year even with the under performing restaurants. I prefer to buy things that are cheap based on average earnings over several years so I am steering clear of this one, but if I had to bet on it I'd say it will work out well at this price.matjonehttps://www.blogger.com/profile/15561610396121006096noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-35427927070525590762012-12-01T11:19:14.882-05:002012-12-01T11:19:14.882-05:00I'd be careful with this one. Book value for ...I'd be careful with this one. Book value for a restaurant is almost meaningless. A large portion of it is leasehold improvements which are worthless in a liquidation.<br /><br />I also look at the # of locations as a negative, not a positive. If you annualize its earnings, you get around $1 million....which means the average restaurant is earning less than $20k/yr on sales of $1.3 million. That tells me that CASA has a lot of money-losing stores. <br /><br />If I had the option of buying 10 stores that earn a combined $1 million or 50 stores that earn a combined $1 million, I'd choose the 10. <br />Anonymousnoreply@blogger.com