Chipotle / Kohl'sO
Wondering if anyone has looked at Chipotle (CMG) or Kohl's (KSS) stock for their own portfolios or perhaps covers it at work - have done some work on Kohl's but just starting to look at Chipotle. Looking at each for long term holds (12+ mos).
On the Kohl's side I see:
+ Beat up stock price putting stock down to 4.7x FY2011 EBITDA
+ Management buying back stock at a very quick clip
+ Smart management team - highly regarded as problem solvers and great managers
+ Great real estate strategy that kept them out of crappy malls
+ Potential LBO candidate - strong cash flows and trading cheaply enough
+ Good deal of debt but well covered by cash flow, and long maturities/good rates (~6%)
- Potential dragging on of low prices in a continued downturn, but less an issue if holding for a long time
- Obviously a very seasonal business
- Customers starting to see through the '50-80% off' strategy they play every week (but management knows customers are on to it)
+ Ridiculous growth rate and expansion opportunities in UK and Canada (but likely already priced in - need to see what current market price implies)
+ Dominant proposition/distinction from peers
+ Replicable model, simple menu, and good stores/design/efficiency
+ Ties w McDonald's give it access to cheap beverage and food vendors
- Potential threat of competition either from other burrito joints or other health/fresh fast casual food (custom salad joints taking off)
- Uncertain future of connection with McDonald's - seems strange that Chipotle is pitching this whole eco-friendly pro-farmer thing while McDonald's clearly has a different view of what constitutes 'food' - curious if the average consumer knows or cares though
Would love to hear thoughts from anyone who's taken a look at these.
Can anyone tell me how to attach a file to this? Have a quick and dirty model on KSS to establish some base price range targets and look at LBO.
And of course, this is not a recommendation to buy either stock.