Depending on where you live, you may not have heard of Jack in the Box (JACK) .
This fast food chain, known for its burgers and curly fries, is widespread on the west coast and across the Southwest but has made limited inroads elsewhere in the country.
Don’t let that geographic footprint fool you though. This is a company that is well-funded, well-established in more than half the country, and highly popular among customers whether they get there by taking a subway or driving a F-150.
Recent news has made Paul Price even more excited about this 70-year old company.
“[Jack in the Box] recently inked a deal to acquire Del Taco ... Management projects the merger to offer immediate single-digit accretion to earnings in 2022 with even greater improvements to EPS after that.” (Price wrote before the deal had closed. It was completed last week.)
At time he wrote, market data did not yet reflect the likely impact of this acquisition announcement. Yet even without accounting for that information, shareholders had seen triple-digit growth in their dividends and returns over the past several years. In Price’s opinion, that’s only going to get better.
“JACK offers drive through, take-out, eat-in and delivery options to customers, positioning the firm beautifully -- regardless of what transpires with the evolution of Covid. It was not forced to close even during the worst of the pandemic-related shut-downs, which were imposed on non-essential businesses.”
In the wake of record-setting results in 2021, Jack in the Box’s stock price still doesn’t quite reflect those gains.
“Somewhat amazingly,” Price wrote, “today's buyers of JACK can get in substantially cheaper than what JACK sold for at its March 2015, May 2017 and May 2021 peaks, despite the major improvements in fundamentals."
And for Price "getting more while paying less is always a positive.”