Jack in the Box
New items at this fast-food favorite could prove to be big again this year. Jack in the Box Inc. (NASDAQ: JACK) has sold off over the past year, and the entry point here looks very solid. The company operates and franchises Jack in the Box restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Eats, a leader in fast-casual dining, with more than 600 restaurants in 47 states, the District of Columbia and Canada.
Last week the company posted solid earnings and same-store-sales results. The company had given conservative guidance for the quarter, so it did beat low expectations, but costs came in better to aid the numbers. The analyst also noted that Qdoba trades considerably cheaper than peers and the brand revitalization is continuing.
Shareholders of the company receive a 1.58% dividend. Jefferies has an $87 price objective, and the consensus figure is posted at $83.31. The stock closed most recently at $76.10.
This is considered a top play for investors looking for a chip stock with Internet of Things exposure. The NXP Semiconductors N.V. (NASDAQ: NXPI) merger with Freescale Semiconductor Ltd. was widely applauded on Wall Street, and many analysts believe the merger is transforming the company into a powerhouse. It made NXP the fourth largest semiconductor company in the industry.
It is also important to note that the combined company becomes the number one supplier in auto semiconductors, number one supplier in global microcontrollers, as well as a dominant supplier in mobile payments.
NXP is getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. Trading at solid discount to some of its peers, many analysts are very positive on the faster earnings growth potential relative to the competition.
The company reported outstanding first-quarter results, and many see the company as having among the highest free cash flow per share in the sector for this year and 2017, a metric they is extremely critical in charting performance. The Jefferies team recently met with management and they feel that the shares trade below intrinsic value, and therefore plan to return all excess cash to shareholders through aggressive share buybacks.
Jefferies has set its price target for the stock at an aggressive $130, while the consensus target is posted at a mere $109.13. The stock closed Monday at $84.97 per share.
All these companies are generating solid earnings, and their stocks have the ability to trade substantially higher. While maybe a touch too aggressive for some accounts, for others these top Jefferies picks may be just the ticket.