Pack Up the ‘Family Truckster’

Written by GSCR Staff   
Thursday, 18 June 2015 06:26

Today’s tagline is a reference to the classic 1983 comedy, Vacation, staring Chevy Chase.

You can still find this one on periodically, a testament to its timelessness. Truly, not much has changed when it comes to packing up the car and going somewhere on the family vacation over the last 30 years. This is analogous to social issues and “Peace in the Middle East” which both seem to be constant over time as well as we mentioned in this week’s Guide.

 

Going back to the vacation theme, we believe we have found a good trading ‘vehicle’ that we have featured before. Travel Centers of America LLC (NYSE – TA - $14.87) has been featured as a 30-30 pick and was highlighted in March of 2013 in the Market Monitor at a $9.65 price point. The stock has had some high and low swings, but is currently up over 54% since then. The chart below illustrates the one year performance for TA which is currently trading above the 200-day EMA, a crucial technical indicator.

 

TA 1-Year Chart, 200-Day EMA

(Source: www.otcmarkets.com)

 

MM.06.18.15.TA-200ema

 

Travel Centers of America operates and franchises travel centers primarily along the United States interstate highway system. The Company offers diesel fuel and gasoline, and diesel exhaust fluid; and operates full service restaurants under the Iron Skillet and Country Pride brands, as well as quick service restaurants primarily under Arby's, Burger King, Dunkin' Donuts, Godfather's Pizza, Pizza Hut, Popeye's Chicken & Biscuits, Starbuck's Coffee, Subway, and Taco Bell brand names. It also operates truck repair and maintenance facilities that offer maintenance and emergency repair, and road services, such as oil changes, wheel alignments, and tire repair; and specialty services, including diagnostics and repair of air conditioning, brakes, and electrical systems. In addition, the company provides RoadSquad, a roadside truck service program; RoadSquad Connect, a centralized call center; and RoadSquad OnSite, a service program, as well as operates travel stores that offer packaged food and snack items, beverages, non-prescription drug and beauty supplies, batteries, automobile accessories, and music and video products. As of December 31, 2014, it operated 250 travel centers under the TravelCenters of America and Petro Stopping Centers brands, as well as 34 convenience stores with retail gas stations under the Minit Mart brand name.

 

The Company has just opened another store in rural Texas and had significant expansion in the Dallas metro area. Additionally, Travel Centers of America has begun aggressive sales and leaseback programs. This should aid the Company in meeting the estimated sales growth rate of 12% in 2016 from consensus analysts. A short float of 3.3% is also another positive technical metric. Finally, an Enterprise to EBITDA of 3.2x illustrates the stock is a great value not only for the average investor but could be a solid acquisition target.

 

Gas prices are still relatively low compared to the last few summers. TA should continue to benefit from this. We see the stock climbing up to $18.50 sometime in early Q4 of 2015.

 

Have a great day!

 

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