We will buy 200 shares of Jack-in-the-Box (JACK:Nasdaq)
at around $70.88 after you receive this Alert. Following
the trade, JACK will represent roughly 3.87% of the
Shares of JACK are underperforming the market today and
we want to take advantage of the opportunity to lower our
cost basis and opportunistically deploy some of our
historically high cash balance into one of our favorite
names. JACK is expected to report fiscal-first-quarter
results next week, and while we are not trading into the
quarter (rather, we view it as a core long-term holding),
we would not be surprised to see the company post strong
same-store-sales (SSS) growth. Recent channel checks
performed by analysts at Wedbush Securities indicate SSS
growth at Qdoba is trending well above expectations (low
to mid-single digits vs. 1.2% consensus and guidance for
up to 2% higher).
Issues at Chipotle (CMG:NYSE), along with Qdoba's
"Knockout Taco" rollout, promotions and catering
initiatives were all cited as comp drivers. We expect
strong momentum to continue through at least the
intermediate term as it takes more market share from
Chipotle, further innovates its menu and continues
executing its remodel efforts. Checks for core Jack-in-
the-Box franchises also point to continued momentum, with
SSS growth in line to above 2.1% consensus, with lunch
and dinner promotions cited for the strength.
Finally, we expect JACK's powerful share repurchase
program to continue through 2016 and estimate roughly 1
million shares per quarter, which would equate to nearly
12% of the company's market cap/shares outstanding. Our
target remains $90.
Jim Cramer, Portfolio Manager & Jack Mohr, Director of
Research - Action Alerts PLUS
DISCLOSURE: At the time of publication, Action Alerts
was long JACK.
We will exit HOT, sell some DOW and buy more BIIB.
Surveying macro/market forces in play and our positions in Bank of America, Facebook and Alphabet.
This week, higher crude and strong earnings had a negligible effect. No new names in the portfolio, though we downgraded 2 positions.
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