Restaurant Brands International (QSR.TO)

(A Top Pick March 13/17. Up 10%.) Made a recent acquisition of Popeye’s Louisiana Chicken. It didn’t strike him as the best place to invest, but by the numbers, it was great.

They do a great job of making acquisitions and squeezing costs out of it. Popeye’s is their latest acquisition. Tim Horton’s have complained that they are pushing too much, but this is how they operate. She thinks they will go on to the next acquisition when they are done with this one. 1.3% dividend.

This has made a number of transformative deals, with Tim Hortons being the major one. Their strength is in cost cutting, and they’ve done a very good job managing that. There has been a little controversy lately of how far they go on costs. Not a cheap stock. Has a healthy amount of leverage. There are some well known catalysts including refinancing, a very expensive pref instrument, which will drive earnings growth and accelerate it heading into 2018. He likes this and would own more if it was cheaper.

Acquiring Popeye’s Chicken makes good financial sense, as both companies were undervalued. Popeye’s had a 37% Return on Capital. Dividend yield of 1.3%. (Analysts’ price target is $64.)

The company has done a great job. They will put deals together, cut the cost structure down, and then you’ve got this great company that expands by acquisition. This is good management that is much more aggressive on costs. A great story.

Sold his holdings when Burger King merged with Tim Hortons, as he was concerned about the debt levels. The valuation on all these fast food companies is sky-high. As a value investor, it is very hard for him to pay these prices where there is not a lot of growth. They get growth by cost cutting. If he ever saw a material pullback, he would definitely take a look again.

They bought Tim Horton’s and made it more efficient. Buy it on pull back because they are fully priced right now.

Its big assets are Tim Hortons and Burger King. Bought this in the high $50s and thinks it is a good company. They have debt, but that will be paid down rapidly. With the extra cash flow, they will buy back shares and increase the dividend. He is more excited about Tim Hortons then Burger King, but overall thinks it is a good company.

He likes it. It is a very well run business. They took a lot of cost out. It is a competitive environment. The stock is not as cheap as it was. They have a lot of debt and some has to be refinanced in the next couple of years.

Restaurant Brands (QSR-T) or Cineplex (CGX-T)? Doing well and expanding many of their Tim Hortons. He would hold off until there is some bad news or the markets get hit.

He likes the trend and likes the company, but there is quite a bit of debt in this. You want to be really picky when you buy it. They’ll work through the debt over time. It is a little pricey in that sector.

A well-run company. Incredibly cost conscious and has exceeded his expectations. Expectations are higher for this company. The stock re-rated, and is not a cheap stock today. You have to get a couple of years out before it starts looking attractive. He likes the company and thinks it is a very strong business, but today is not the day to be jumping in. An important name to be following.

This company’s business translates across the globe. A good business to be in. It is a good investment, but the problem is that it has run up tremendously. He would take a look at Dunkin’ Brands (DNKN-Q) or Starbucks (SBUX-Q) instead. He is a shareholder, but is not selling his shares.

Has not been adding to his holdings. It has been expensive since it existed. Everyone has been focused on earnings, and not free cash flow. They started approving returns on CapX, and if the franchisees did not meet the return they were just not going to spend the money. This has been north of 20X earnings for the last 2 years, but as free cash flow it was 5%-6%.

(Market Call Minute.)