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Panera Bread Company Message Board

  • techstrategy techstrategy Nov 28, 2011 2:40 PM Flag

    Now is the time to buy LT DITM Puts...

    Alright folks, now is the time to capitalize on the greed play. Buy $160ish LT (Feb-May) puts on this stock, about 50% more than you would hold as a short position.

    You won't be exposed to the "lower volatility" squeeze (which devalues OOM puts) and folks will have to drive this higher to actually degrade value. If they are able to, you can either move deeper in the money (which is what I will likely do as this squeezes). This stock is totally hosed in Q1 next year.

    The institutional longs are being greedy and trying to distribute very slowly. Ultimately, they are going to end up holding a lot more shares down at 80 then they would if they were actually engaged in prudent investing. The risk/return on this stock is now badly skewed to the downside...

    Hedgies are accumulating all the shares that are being slowly distributed. When next earnings come out, this will gap down to around 100. Don't buy too many puts so you can see this through until next year.

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    • This stock stinks, that's for sure. 4 billion market cap for a bakery chain, give me a break. What 1500 locations so doing the math on average each store worth 2.66 million. lol

      Looks like another momo scam stock as I see Fidelity heading it up here. I really doubt the growth from Panera is real as usually these momo scam stocks have a dual aspect as wall street does its thing while management are complicit and provide the fake growth to allow the madness to continue. Who knows its possible the growth is actually real but again the odds are stacked against that idea.

      I see a class action suit was filed a few years back and settled by the company recently so there is some precedent of shenanigans from PNRA. And the RELENTLESS insider selling is always amusing. My guess is this company is doing some cooking along with baking, time will tell.

      • 1 Reply to horangi133
      • Horangi,
        Have you actually even been to a Panera? Try getting a table at lunch rush. This is a lunch place that is growing into breakfast, dinner, catering, and drive-through. There is a lot of growth left beyond unit growth. The new stores have averaged $41k / week this year--that's $2.1M in sales. So, your price is 1.2 x sales. These stores sell more than an Applebee's--with a bar! That is incredible volume.

    • I disagree with your downside target. Mgmt has been prudent about buybacks, but big buyers when their 15% return target is set. Last quarter, that was on average $103. This is a management which did not buy for a year--they are patient. The best-informed buyers in the market say a 15% annual return can be had around $100.

      I do agree that we are getting pretty high. I just put in a sell order at $150. I actually calculate a sell at $145, but we're so close to that I think I can add some momentum to the valuation. Management has repeatedly stated that EPS will grow 15-20%. (although they also always state their targets do not include buybacks) But mgmt also has been known to under-promise and over-deliver. They are continuing a 7% growth pace for new stores, but were very clear that same-store sales will have a difficult time staying as high as Q3 (6%) for Q4, which was the wide introduction of MyPanera. Without expectations of meaningful margin improvement, this is too high for a high-teens EPS grower.

      This stock is a steady grower, and mgmt delivers on what they say. If my order triggers, I will still be following them, and will readily be back in around mgmt's buy-in level.

    • I respectfully disagree with you. There are no institutional longs distributing PNRA. Volume has been low on down days and building on up days. The EPS will double next 1/4. In fact it's being accumulated. I feel you are off the mark.

192.01-1.85(-0.95%)1:12 PMEST