Bojangles as a stock

We like Bojangles...for food.  Their biscuits are unbeatable, their chicken we understand is lights out compared to other offerings, and yes they know how to brew some seriously good iced tea.  We even know some Yankees, and even some damn Yankees, who came south and can be found regularly at their restaurants.  Most of their customers literally crave this food. Heck we love their food and really like our local Bojangles and their crew.  With that said we are not so sure about their stock. 

Do not get us wrong here the company is well managed, maybe as well managed as any fast food business out there.  We love their concept and the business model.  We honestly think some of their restaurants are the best run and most pleasant places to dine we know, with the exception of some of those Down East NC. (Are you listening Mr. McRae?)  Absolutely love the use of what we consider a best business practice of selling at the price that generates the most sales possible and not at the price that is trying to make the most profit per sale. KFC is being pushed hard by Bojangles to reorganize their business to compete.  Those that think Popeyes will a better operator are wrong too, even though we really really think Popeyes is running a darn fine company too. With that said we are not so sure about their stock. 

The stock is selling around $26 as we speak and that is our best guess around a 35 PE, which is rich even for a good growing business.  The price ran up higher earlier on this month after the IPO and that was expected as those who hold stock in index funds who must buy this stock bought in.  Lately it has settled down a bit and we are waiting for the first ever earnings report which should come in about one week.  Now most new IPO's make sure, make real sure, that first post IPO earnings report is a sweet one.  You know cut expenses, shift costs, and push forward some revenue to hold up that stock price sooner rather than later. We spent a good bit of time reading their IPO and liked what we read, we will likely spend some time reading their earning report too.  But we believe this will be a show me stock in the ultra competitive world of the food business. Remember it is not what YOU think or even how the business does with stocks like these, it is how Wall Street thinks that could cause a buying of the shares and push up the price for the first few cycles. 

Also note that Bojangles did not get any proceeds form their IPO, it was a selling of some of the internal shareholders wanting some cash from their current holdings.  That is good that there was no dilution of the shares, but is is bad that Bos did not get any cash to expand store footprint.  I would not be surprised to see something like a secondary offering soon to do just that and that might come shortly after a good earnings report at some point. That will likely depress the shares and that might offer an opportunity to get in cheaper.  We would like it under $25 and would much prefer under say $22 or so.  But this is a speculative stock, not a swing for the fences stock. 

So be careful, and be patient here with BOJA.  Risk happens fast. 

Best Eats at Emerald Isle.

After three plus years having a home on Emerald Isle NC we believe we now know the best places to dine out. Maybe we can save you time hunting for a good one and save you some money as well. So without further ado here goes. 

Rucker Johns...Hands down the best place for overall dining out on the island.  Quality food, top of line taste, first rate wait staff, and most importantly at a fair price. You can pay more for dining out food, but we honestly do not believe you can find better quality food.  The prime rib and steaks are always excellent and they are Certified Angus Beef.  Be sure to try their salads and the house made hot bacon honey mustard dressing.  We find little here that is not excellent from the Tuscan Turkey Sandwich, one of our favorites, to the Crab Cakes which everyone seems to like.  The Cajun Shrimp Wrap is to die for according to my wife, oh and use the aforementioned honey mustard hot bacon dressing there as well.  If you like a steak salad, it is not on the menu, but ask for it and I can personally say it is mighty good. They bring a honey croissant with the salad which I could make a meal out of myself and you can order a basket of these babies.  Simply put you can not go wrong with a meal from RJ's as the locals call it.  They like children too.  Prepare for a wait during the summer season, but the kids can be entertained outside with the turtles in the canal behind the restaurant.  Worth the wait. Located behind Food Lion on the island so go find it. Open lunch and dinner. 

Mikes Restaurant...Locally owned place that can fool you when you ride, which we did for over a year,  by the sorta hole in wall looking place. Excellent cheap fast served breakfast for your mornings, go with the home fries.  The wait staff is fast and friendly.  We have yet to try their lunch menu, since we remain hooked on breakfast, but we understand that is right good as well and again not budget busting. They have a Sunday Buffet breakfast with is about $10 and offers up plenty of good eating. Prepare for a wait during summer season since lots of people already know about the place, but the line moves quickly. Located across from BB&T Bank on the island.  Open only for breakfast and lunch. 

Circle Pizza...We admit we rode by this place dozens of times without stopping even though we had heard their pizza was top notch.  We tried it about three months ago and will never go anywhere here for pizza pie.  The pies are loaded and got lots of cheese.  The wait staff is good too and told us the first time we went we would be hooked and they were right.  We understand the burgers, which are said to be huge, are might good too.  Located down the island a ways from the bridge in a strip center, but right on the main drag sound side so easy to find. 

Village Market...We like this place for the friendly people there and their very good food.  We get their Boarshead Turkey for sandwiches at home and I personally like the potato salad.  They have a good breakfast and a regular lunch special that is good and could be considered healthy food.  They of late have begun to offer take home suppers too.  Located on the main drag down from the third light on sound side. 

Sweet Spot...Despite several places on the island offering ice cream we still find Sweet Spot our favorite.  The owner is usually there and keeps the place running like a Swiss watch when lines appear.  The girls who serve up the ice cream are well trained and personable.   Lastly they serve Hersheys brand which we find to be better than other brands we have tried. There is other novelties in the store you might consider and a big selection of fine chocolate and candies.  Oh, and if your timing is right you get to sit in the rocking chairs out front and watch the world go by and converse with others enjoying their delight. Located almost directly across from Mikes Restaurant. 

T&W Oyster Bar...Yes we know this restaurant is not on the island, but it is worth the less than 10 minute trip right across the EI bridge and straight on up NC 58 on the right.  Excellent seafood restaurant with a full selection of Eastern NC seafood and all of it very good.  Be prepared to restrain yourself on the excellent hushpuppies.  I like mine even more by dipping them in the butter offered at the table. Weight gains beware.  This place is a legend around here and frankly had some bad years after Earl sold it.  He bought it back some years ago and the quality is back and so is Earl who will most likely visit your table personally to make sure you are getting what you desire. 

There are other restaurants on the island and some are good and some we have not tried, but the ones above we can personally tell you that you most likely will go away happy. 

Walmart coming to town.

Been there, done that as they say.  We personally have lived in and managed a business in 4 Eastern North Carolina towns where Walmart located a Super Center while we were there.   So when this Onslow County raised boy posts what we is about to post about the coming of Walmart to two Onslow County towns we know of what we speak and frankly we know many of you will not like nor accept what is about to be written here.  So here goes.

Richlands has a new Super Walmart and Swansboro is about to get one, both towns are in Onslow County.  Like it or not the when Walmart comes to town it is a good thing.  Let's just look at some examples where we have actually done business, before and after Walmart's arrival. 

Simply put if you are in a dying market Walmart can indeed hurt the prospects of local merchants. But dying or weak markets is more a sign of bad government than it is which new retailer comes to town.  On the other hand if the market is growing or stable then Walmart actually helps the market. Walmart helps the market by drawing MORE customers into the town because they want to shop at Walmart.  In return these new customers who would likely go elsewhere will usually spend money on other items Walmart does not sell while in town like dining out, higher end clothing, insurance,banks, new cars and trucks, furniture, appliances, and use local services like dentist, doctors, carpet installers, and more you get the picture. Smart and clever merchants quickly find niches and opportunities to feed off these new people coming to the market. 

Clayton NC is a perfect example.  What was already a growing town got even stronger with Walmart locating there.  Few retailers closed and the downtown area actually picked up new traffic with the new Super Center.  Like in most new Walmart locations a dozen or more new retailers popped up right around Walmart.  Wendys, Hardees, Starbucks, Zaxbys, Lone Star, Maurices, and even Dollar Tree right beside Walmart just to name a few.  Think about that a DOLLAR TREE located right beside Walmart.  All feeding off the new traffic, all providing new jobs, all providing new property and sales tax revenue. 

Even in weak markets like Smithfield NC the coming of a Walmart Super Center helped business. Again Belks, Dollar Tree, a local optometrist, Subway, a local mexican restaurant, two local cell phone retailers, McDonalds, Taco Bell, a bank, etc all located in or near Walmart.  Again more jobs and tax revenue.  Not to mention the housing that grew up to be near shopping.  Yes some local merchants died and some have shrunk, but they were mostly those who refused to find ways to use new customers or just had a bad attitude toward the new Walmart. 

That last sentence above is important, "had a bad attitude".  One can think and want your small town to stay the same or even not have new shopping choices, but never have I seen the same people upset when new employers come to town or even new restaurants, so why be so negative regarding Walmart.  Have you actually experienced a new Walmart several times like we have or are you just taking in what you heard on television or from others. Here is a fact neither Swansboro nor Richlands is the same small town we remember as a child growing up in Onslow County and they will not be the same with or without Walmart twenty years from now.  Decades ago this same attitude costs Onslow County the big employer Dupont, which wanted to locate near Richlands and no one would sell them the land, so they eventually located north of Kinston NC where they could buy land.  I suppose many of you would have preferred the local Marine Base to have not located here too with all those jobs and spending in the local economy.  Do you think that since you have employment that someone else who lives in town should not have a job who needs one? Are you that selfish?  Are you of the mindset that you do not want your town to grow?  Have you lived in a town where there is absolutely no growth, we have, and it is not very pretty. Do you think that is fair to others to want a no growth dying town? Do you think that Walmart will bring more crime and trouble?  Seriously get real on that last one as that is foolish thinking. 

Our small towns will prosper and do well with a Walmart coming to town offering hundreds of new jobs and traffic to help existing merchants.  Besides no one puts a gun to someone's head to shop anywhere else than they do now. But as our wife says often the prices at Walmart are good and she is not going to make someone else's pocketbook her personal charity just because they do not reduce their prices.  

As for each town Swansboro will likely do well with their new Walmart since the town is close to the base and will draw military shoppers into town and will now keep more dollars from well off retirees who are located on nearby beaches and in the area who will now shop at Walmart and stay in town for other needs instead of heading off to Morehead or Jacksonville. Richlands will likely see some new traffic from towns and areas west of Richlands like Beulaville, which got some of Richlands customers some years ago when Bojangles came to that town.  I expect it will be a net plus there as well and in time Richlands will see new restaurants.  The land in front of the new Richlands Walmart across from Liberty School looks to us to be a perfect spot for a restaurant. 

In the end look at Walmart as a positive and not a negative.  

Boring, Boring, Boring. Stock Market.

When we talked with our financial advisor yesterday we both searched for words to describe this market and both came up with only one word "boring."  After thinking about it for awhile we decided that indeed that was exactly what we had with both the economy and this market. 

Well we are here to tell you, boring is good, in fact mighty good.  We value the market as fairly priced considering the near zero interest rate environment,  near dysfunctional US Government, and near no growth economy.  The market truly reflects the environment right now.  Let's examine what it means for investors and traders. 

For traders like us we find we must work a lot harder to find trades and score profits.  But we are ahead of last year's pace by a good bit and we expect the rest of the year to be the same.  A boring market means little chance for losses and specifically large losses.  On the other hand it provides good opportunities for above average profits for those willing to do the research and take the time to wait for trades and not chase them.

For investors there is the steady drip of stock market price appreciation via the Obama spending spree/Federal Reserve low rate environment and the financial engineering of corporate stock buybacks and dividend increases. Therefore a regular monthly investment in index S&P 500 funds and letting them drip, drip, drip to gains is the obvious choice.  This certainly is not get rich quick, but it is get rich slow and that is just fine with us. 

Boring is beautiful it seems. 

Searching for Something.

Blah, blah, blah, the financial media blahs on.  Talk, Talk, Talk, the Federal Reserve weaves and turns and does nothing. Obama, Congress, and politics, nothing changes there either.  For about two months we have searching for something to post about and frankly there is nothing there since nothing, absolutely nothing, we have posted about in the last few months has changed.  

Our trading and investing portfolio has changed little.  Since January of this year we have added exactly one position China Mobile, symbol CHL, that within a week after our taking the position the stock rocked up about 10 points and we will take quick profits and go home soon.   We have not moved one iota from our mega and large cap stocks in our long portfolio and only the one change as noted in the trading portfolio.  In either case both portfolios continue they slow steady double digit move upward. The reasons are simple nothing in the economy or politics has moved period. 

The political economy of Obama and the Federal Reserve and almost zero rates is here to stay for at least 21 more months. That continues the generational theft that started in 2008 and continues apace today making those of us with assets safely getting richer day by day in our financial assets.  The financial engineering that is a result of the political economy of low rates and produces bigger than big stock share buybacks and regular increases in profits and dividends continues without any end in sight.  

The fact that here in the first few weeks of the second quarter 2015 earnings reports we get almost universally no increases in top line revenue growth, but almost universally bottom line profit growth tells anyone who has been around this game for more than a few years that few companies are seeing any new customers nor any customers spending more money with them. We indeed have reached the end of Obama and The Federal Reserve's game of tricks and ammunition to juggle figures or push the economy forward.  The bullets are all but non existent, except that if the economy dips again the Fed can restart the bond buying and add to their already $4 TRILLION dollar balance sheet with more bond purchases.  After what looks to be a dead or negative growth GDP in the first quarter 2015 they might have to dip back into that bag.  As they say a Trillion here and a trillion there and after awhile you are talking about real money. 

So where do we go from here.  We continue to stand by our prediction that nary a rate increase will be seen until after the 2016 election and if Hillary Clinton emerges as the winner maybe not anymore after that for eight more years.  Yes readers you heard it here first maybe almost a decade more of no rate increases, no interest earned on bonds, no interest earned in savings accounts, and lastly more asset appreciation for us holding assets. 

Be wise and keep your money in large cap stocks and get them out of bonds.  The only move we might see in the next twelve months is a concerted effort by banks and the feds is to push up SHORT term rates, not long term rates, in a last effort to run the very last hold outs from bonds into stocks and housing.  That is again one more move in the financial game by the politicians to get housing up and moving which is the first sign of economic growth.  Think about that we are years into a so called economic recovery and the powers that be are still trying to get the first thing that moves in an economic recovery moving and that is housing. 

As for us we will soon be heading to the beach to spend some of that lovely money you young folks and fools keep sending us out of your paychecks and future hopes for a better life.  That means we will be spending the young generations future fun money now.  We will send you a picture card young folks if you will forward an address, we already got your money for the stamp.  I believe the current President and the future female occupant of the White House call this "fairness". 

Rate Hikes and the Stock Market

We have been on record for some time that any rate hike from the Federal Reserve is over a year away.  In fact we see none until after the 2016 election cycle.  Even then if it comes it will be quite small with a note from the committee that they are done for awhile.  Here is our thinking. 

The economy is still weak.  Retail sales are lagging and home sales can not get past start.  The media and more importantly the financial media is just flat out ignoring those facts.  The Fed fortunately is not.   Note that home mortgage rates refuse to go past the 4% mark for a 30 year loan. Move above that 4% and home sales drop every time. That in turn keeps a lid on housing values as those two elements are linked. Add in that many young people can not afford a new home while working as a service worker, which are the only jobs being created presently. Retail sales too are not growing as noted by the continuing closing of stores by chains such as Target. Those two financial facts alone dictate the truth that employment is still way below where it needs to be in this country. Despite the headline seeking below 6% unemployment rate the fact that there is no wage pressure tells anyone who has been a long term observer that there are lots of employees seeking the few jobs available.  Now much of this labor weakness is the lack of marketable skills and the unemployed not matching the jobs that are open. Many just refuse to take a job, any job, to keep the money flowing. The UNDERemployment rate is still over 10% and reflected in federal data. 

So with these weaknesses the Fed is unable to push up rates with no demand for loans and no demand for business expansion. This economy is also being restrained by huge regulatory burdens and high taxation of SMALL business put on by the Obama administration where the mass of new job creation always comes in the economy.  The jobs that are there are entry level, which again many young folks will not take due to being over qualified.  The ones that are taking jobs are jobs in the service and restaurant industries as we noted earlier where the wages are low. The Fed also sees a world economy as weakening and Europe, China, Russia, and Japan in economic trouble. Finally the political angle, no way the Fed raises rates in an election year when they need a Democrat to win the White House to keep them appointed to the Federal Reserve Board. 

We again touch on the generational theft that is occurring with the twin issues of low rates which constitute the financial engineering of allowing big corporations borrow debt to buy back stock and the continuation of mega corporations to use profits to buy back more stock and reward those who are shareholders.  Obama's huge deficits and mountain of national debt are rewarding those who are the ultra rich and just want 2% or 3% interest from US Treasuries for their huge asset bases to throw off nice sums of interest to live on.   These ultra rich, like the shareholders noted above, tend to be older gentry rich or the retiree rich in lifetime accumulated assets.  How long we will continue to vote in the people who keep this generational theft going who knows.  The electoral control is now mostly in the under 35 year old voters who seems to be clueless in their foolish actions of electing those who continue the generational theft of using government to pad the rich and retired and take jobs and opportunities for the young. 

In the end those who continue to own stocks, and we continue to suggest large corporations, will prosper and be comforted.  Seems we now afflict the already afflicted and comfort the already comforted.  We who own assets are thinking another eight years of Hillary Clinton and we will be nearing the end so who cares who the Republican nominee is if we can run out the clock doing life this way. Think of it like this, if you hold AT&T and Verizon, both paying above 4.5% dividends you are getting a nice return on your savings.  All the while with the solid safety of knowing the young folks hooked on iphones and such are using their precious few dollars in pay to support you by being coddled and amused with their toys.  The beat goes on. 

Current complete Trading Portfolio, Mutual Fund list, and Watch List.

We offer our current entire trading portfolio, watch list portfolio, and mutual fund list here.  We continue to find the market safe and suggest mega and large cap stocks and stock funds.  Avoid corporate bond funds, real estate, utilities, and anything that can get hurt with a raise in interest rates.  We still believe there will be no Fed raises until late 2016, but ere on the side of caution. The strong dollar will support the stock market for the foreseeable future with the influx of foreign capital. Add in the huge Federal Reserve US Treasury portfolio and continuation of Obama's spending. That political economy and the financial engineering of stock buy backs makes for opportunity in investing and trading for at least another two years.  This generational theft should continue under Hillary Clinton as President assuming enough people continue to buy into this scheme. It is indeed a great time to be a trader and investor if you are past 55 years or age or so. 

AAPL....Apple is our largest holding.  We continue to like this company for the long haul but believe it has traded a bit ahead of itself here and will wait for a pull back before adding more.  However if you looking for long term you will be fine here at just below $130 as the people who buy their products are literally addicted to buying anything new that comes out making for high sales and high profits for as far as the eye can see.  Their stock buyback program is second to none. 

AXP...We believe American Express sold off a bit too much as going forward any of the big three issuers of credit cards are the toll makers for more and more payments by everyone for everything bought going forward.  Amex still has the high volume high ticket card holders which makes for high profits that even Warren Buffet likes. 

C...We like Citigroup for the value and like financial stocks for the upside potential. The big four banks offer almost complete safety due to the "Too big to fail" rules now in place with the increasing dividends and capital gains soon to come when interest rates finally begin to rise. Banks are now fully regulated utilities that have yet to find full value like their cousins electric utilities. 

GCI...We are waiting for the spin off of the newspaper group from Gannett as the spin off will consist of some nicely placed properties that will be undervalued for the profits they will make.  The key is how much debt the new company will be saddled and if not much will allow them to go buy some cheap newspapers out there. We are waiting to see what value might emerge. 

GILD...Gilead Sciences is a undervalued drug company that is becoming the big player in bio.  There is risk, but at a single digit PE much of that is priced in for their blockbuster profit making drug line. 

GS...The big bank not included in the big four too big to fail group but offers good value and the opportunity to gain from the bank advisory services. Goldman Sachs also has the blessing of a deep attachment to Hillary Clinton the assumed next US President. 

INTC...Continues to pump out profits, stock buybacks, and is involved in almost everything digital. Yes there is concern about Intel not being involved enough in mobile however we believe the death of computers is an assumption that will not happen. 

JPM..We like JP Morgan best of all the big four banks. It is value priced and has great management. 

MEG..Little known television station owner is primed to make some big money in the coming 2016 political season.  There is high risk here and we are waiting to see if the stock sells off and gives us an entry point where risk is less. 

MET..Metropolitan is the biggest insurance player out there, notably in the life insurance business.  The low PE means it is value priced and like other insurance companies is primed to make some good profits when interest rates kick up and their premium pool can gain from higher rates. 

MSFT...Microsoft under new management is getting smart about future business.  The next Windows upgrade will be the last as the company begins to concentrate on cloud services and other higher value tech business. 

NEWM..New Media Investments..Simply put our favorite stock for future capital gains.  This small newspaper acquirer is using stock sales and little debt to buy newspapers on the cheap. We are leveraging up more in this small cap stock.  Do not underestimate the opportunities in smaller newspapers who still have a monopoly status in their markets and are making good profits. 

NNC..Our go to North Carolina Muni Bond fund.  This closed end fund is undervalued by almost $2 per share and pays right at a 5% tax free dividend.  Here is a great place to collect cash and wait. 

ORCL...Oracle is the big fish in the software pond and therefore when anyone is upgrading or rebuilding their products are a must buy.  Value priced. 

PM..Phillip Morris is the largest international player in the tobacco industry. Despite some pullback from being hurt by currency risks this company is very shareholder friendly and does big buy backs and increases dividends regularly. 

PRU..Prudential is a large player in the insurance industry.  It is undervalued and ripe for a move upward when interest rates finally make the move upward. 

SF..Stifel Nicolaus has been on a consolidation binge for some time.  We like this stock and management a lot due to it's skill at folding in acquisitions and it's savvy for finding smaller players in the financial industry to fold in to slowly make SF a big player in the stock market game. 

T...AT&T..continues to be a steady eddie stock with slow growing dividends and safe place to park capital. 

TCAP...Triangle Capital..We really really like this stock. Great safe dividend, fabulous management, and good capital gains potential. 

VZ..Verizon..Large telecom stock which we have been trading for a long time. Steady growth, solid dividend, and sleep well at night. 

VEIRX...Large cap Vanguard value fund with lots of dividend paying stocks.  The Equity and Income fund is a good choice for dividend income, stability of principal, and better than average capital gains. 

VFIAX..This Vanguard Fund is the S&P 500 index fund.  Basically owning percentages of the largest 500 companies in the US.  Stability, growth with the market, and as Warren Buffet says betting on the health of the American economy going forward.  Absolute essential fund for every portfolio. 

VWIAX...This Vanguard Fund is in our opinion the best one for stability of principal while giving you some solid dividend and bond interest income.  Wellesley Fund is 60% stocks and 40% large cap corporate bonds.