For Immediate Release
Chicago, IL – June 14, 2013 – Zacks Equity Research highlights Biogen (BIIB-Free Report) as the Bull of the Day and Crocs (CROX-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Krispy Kreme Doughnut Inc. (KKD-Free Report), Burger King Worldwide, Inc. (BKW-Free Report) and AFC Enterprises Inc. (AFCE-Free Report).
Here is a synopsis of all five stocks:
Although markets have been shaky as of late, a few sectors have managed to hold up surprisingly well. In particular, there has been great strength in the health care space, as this segment is currently leading the market from a year-to-date look.
The sector is still up about 20% so far in 2013, even when taking into account the global sell-off, suggesting that health care is now the leader of the market. Yet when investors drill further into this space, they find a true outperformer; biotechnology.
This corner of the health care world has been crushing broad indexes lately, both in terms of the health care sector and the overall market. And in this winning space, one name that stands out and could continue to lead is undoubtedly Biogen (BIIB-Free Report).
Biogen is one of the largest and most well-known names in the biotech sector, as the enormous company has a market capitalization of over $50 billion. The Massachusetts-based firm is probably best known for its MS drugs, although the company has a number of other therapies for various other diseases as well.
Like many other names in the sector, BIIB has surged to start 2013, continuing the firm’s solid run from a share price perspective. The company is actually up more than 30% YTD, and has added an impressive 125% over the past two years, suggesting that this has been a long growth story.
The consumer has come back strongly this year, as housing prices and confidence have rebounded. This has helped many discretionary stocks to soar in 2013 and many believe this can continue if current trends in the market hold up.
Yet while the sector outlook might be very promising, not all companies look to ride this wave higher. In particular, Crocs (CROX-Free Report) could be one company that misses out on this consumer boom, and gives back some of its gains from earlier in the year.
Crocs is a Colorado-based company, best known for its unique footwear, although the company also makes a number of accessories as well. While its shoes might be ubiquitous, the firm isn’t exactly in a number of portfolios as it has a market cap of less than $1.5 billion and is well within the small cap range.
Arguably, the best days are long past for this once high flying company, as the stock was once at $35/share, roughly double its current share price. It appears as if the trend has passed Crocs by and that investors have moved on to other names in the broad consumer market that are still ‘in’.
Analysts seem to agree with this assessment too, as expected earnings growth comes in slightly negative for the full year period. This includes a roughly -20% EPS growth rate for the next quarter time frame, and a --0.3% for 2013.
Krispy Kreme’s Franchise Deal in Dallas
Doughnut maker Krispy Kreme Doughnut Inc. (KKD-Free Report) recently formed a venture with an affiliate of Sun Holdings, LLC for the refranchising of three company-owned shops in Dallas, Texas. Upon completion of the deal, these three stores will be Krispy Kreme’s franchised stores. The deal is targeted to speed up Krispy Kreme’s domestic franchise expansion.
We believe, the latest alliance reflects the franchisee Sun Holdings’ intent to make Dallas one of the prime markets for domestic expansion considering the state’s potential to generate about $40.8 billion in restaurant sales, as per the national restaurant association.
Investment Management company Sun Holdings boasts superior local market knowledge and has a proven track record in the restaurant industry. It operates about 400 restaurants in Texas and Florida, including brands like Burger King Worldwide, Inc. (BKW-Free Report), AFC Enterprises Inc.’s (AFCE-Free Report) Popeye’s, Golden Corral and Arby’s.
Since fiscal 2009, this Winston-Salem, N.C. based-company signed a number of new franchise agreements. As of Feb, 2013, there were 9 Krispy Kreme franchise stores in Texas. In fact, Krispy Kreme also has future development agreements with existing franchises in Texas to open 4 new stores.
Franchising a large chunk of its system reduces the capital requirements of the company and thereby drives earnings per share and return on equity (:ROE). Alongside, free cash flow will continue to grow, allowing reinvestment for increasing brand recognition and enhancing shareholder return.
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