|Written by GSCR Staff|
|Tuesday, 19 May 2015 05:46|
In yesterday’s Goldman Guide we mentioned that we seemed to be entering opposite days when it comes to the market.
Klptzyxm! For those of you born after 1980, that reference may be beyond your knowledge base. We thought we would take a look for cheap stocks that may seem counterintuitive.
There have been a few recent IPO in the fast food industry lately which have bucked the normal trend, especially for what seems like overhyped issues. Shake Shack, Inc. (NYSE – SHAK) is up almost 40% its initial debut in January. Bojangles, Inc. (NASDAQ – BOJA) climbed nicely last Friday nearly 14%. We will see if the fast food IPO trend continues.
Today’s stock is takes the industry trend further and hopefully capitalizes on our cheap trade idea from the Guide. Below is the six month chart for Cosi, Inc. (NASDAQ – COSI - $2.29) along with the line for the 200-day EMA which the stock price has recently crossed.
COSI 6-month Chart, 200-Day EMA
The stock appears to be on another momentum accumulation and could be ripe for a quick buck trade.
Cosi, Inc. owns, operates, and franchises fast-casual restaurants. The Company offers food and beverage products for four times of day comprising breakfast, lunch, snacking, and dinner. It also provides catering services for breakfast, lunch, and afternoon snacking. As of March 11, 2015, the Company operated 63 company-owned and 49 franchise restaurants in 16 states, the District of Columbia, Costa Rica, and the United Arab Emirates.
Another plus on the technical side is the short float of just over 3%. Top line revenue CAGR is set to average 15% for 2015 and 2016 over 2014 as the Company just announced a fifth store in Costa Rica and is finalizing the merger with Hearthstone. Finally, $21 million in cash versus just $6 million in debt as of the end of 2014 is another sign the Cosi is well positioned to continue to expand.
We think COSI is a great summer play on dining out and appears to be in play on the bizzarro world of the summer stock market. We think the stock climbs back toward the $3 level by the end of the summer.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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