J. Alexander’s – Fine Dining, Fine Stock

Written by GSCR Staff   
Friday, 23 September 2016 06:41

In Monday’s Goldman Guide we pointed out we are about 6 weeks away from Halloween and that we liked Rocky Mountain Chocolate Factory, Inc. (NASDAQ—RMCF) as a seasonal play. Also in scary news, the presidential election is less than 50 days away, and one of these ghouls will be president elect then! On the flip side that does mean some certainty as far as the market and the economy is concerned. Like the Guide, we will stick with food for our pick today, but on the fine dining side.

The one-year chart for J. Alexander’s Holdings, Inc. (NYSE – JAX - $10.02) is illustrated below along with the indication that the stock is currently trading above the 50-day EMA.

JAX 1-Year, 50 Day EMA

(Source: www.otcmarkets.com)

MM.09.23.16.JAX-1yr-50dayema

J. Alexander’s Holdings, Inc. owns and operates casual dining restaurants in the United States. It operates three complementary upscale dining restaurant concepts, including J. Alexander’s, Redlands Grill, and Stoney River Steakhouse and Grill (Stoney River). The Company’s restaurants offer American menu. As of March 9, 2016, it operated 42 restaurants in 14 states. J. Alexander’s Holdings, Inc. was founded in 1970 and is headquartered in Nashville, Tennessee.

How is the election and this stock tied together? We believe that no matter who wins it will bring some calm to the markets and a continued up-tick in the economy. Our thesis is that this is great news for stocks like JAX. There are a few metrics that stand out. Sticking to the technical figures, the stock has a low short float of just 1.5%. Our forward vs. trailing P/E check is also a nice check in the box, 17 vs 48 on consensus revenue growth estimates of 7% over the rest of this year and 2017. Finally, EPS performance is solid with three straight quarters of beating Wall Street estimates.

JAX is a great undervalued consumer discretionary stock that is set to pop with continued economic improvement and certainty from the presidential election. We think the stock climbs back to $13 over the next three months.

Have a great day!

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