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Chipotle is an Orphan Stock

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I gave my thoughts to on Chipotle (CMG) to Kyle Woodley for a story he wrote for US News and World Reports. Chipotle is a great company and one of the great growth stories of the past decade. But unfortunately, the stock is something of an orphan right now:

“This is the issue with Chipotle today: It’s a stock without a buying clientele,” says Charles Sizemore, founder of Sizemore Capital Management, a fee-based registered investment advisory firm based in Dallas. “It was a high-flying momentum stock that has now lost its momentum.”

Chipotle was a hot mover for years prior to 2015’s nosedive. Shares more than tripled from their October 2012 lows in the mid-$200s through its all-time high of $758.61 in August 2015. That included a rapid move of about 25 percent that drove CMG to its peak in about six weeks.

However, a decline of roughly 35 percent hasn’t exactly been followed by a lot of dip-buying…

Before Tuesday’s report, CMG was trading at 28 times trailing earnings and 37 times forward earnings. “And while those numbers aren’t off the charts for a restaurant stock,” Sizemore says, “Chipotle doesn’t follow a franchise model. A franchise model is generally more profitable in terms of return on equity and commands a higher earnings multiple. Chipotle manages its own stores and has no plans to franchise.”

That leaves CMG in a precarious position. Sizemore says Chipotle’s lost momentum means “trend followers probably won’t return to it. But it isn’t cheap enough yet to attract value investors. So it’s something of an orphan right now.”

You can read the full article here.

Photo credit: Mike Mozart

Charles Sizemore is the principal of Sizemore Capital. As of this writing, he had no position in any security mentioned in this article. 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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On WSJ Voices: Picking the Right Estate Attorney

The Wall Street Journal’s Voices column picked up my comments on choosing the right estate attorney. You can read the full article here (subscription to the WSJ may be required), and an excerpt follows below. Enjoy!

Many people think estate planning is mostly about having the right papers in place, but it’s really bigger than that. It’s about managing people. At the end of the day, you can do everything by the book—a will, trusts, custodian arrangements—but none of this necessarily matters if your heirs don’t know where the documents are, what to do with them, or are too emotionally overwhelmed to act.

This is where a good professional can really prove their value. After I had kids and it came time to update my estate plan, I took the details of my financial life—everything from my business-checking accounts to the kids’ college funds—and gave copies to my estate attorney. I then gave my wife, mother and mother-in-law the attorney’s business card and said: “If I die, call her. She knows where everything is.”

This is the kind of advice that I now give to my clients. Simply having the right documents isn’t enough; once you organize your estate plan, you need to pass it to a professional who can hold your heirs’ hands through the process after you are gone. You need someone who can take charge in their time of need.

 

You can read the full article here (subscription to the WSJ may be required).

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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The Importance of Cash Savings

I recently sat for an interview with LoanNow on the importance of saving. Here is an excerpt:

What are the smartest financial decisions we should make?

I really can’t emphasize how important it is to save money. Virtually all other major financial decisions we make – buying a home, starting a business, investing for retirement – first require the existence of cash savings. Without savings, you cannot make a down payment on a house, finance a new businesses or buy a single share of stock; you’re sitting on the sidelines while your friends and neighbors are getting ahead. Step one – before you do anything else – is to save money.

What advice can you offer individuals and families loaded down with debt on managing it? What are your favorite methods for paying down debt?

Debt can be paralyzing. When confronted with rising debts, it’s easy to get overwhelmed with a sense of hopelessness and do nothing. And unfortunately, there are times when a debt load becomes unpayable and the only way out is to file for bankruptcy protection. But this is not something I recommend for the vast majority of borrowers because it ruins your credit, it carries an ugly social stigma and doesn’t eliminate all of your debts. For example, any debts you owe the government – such as IRS taxes or federal student loan debt – are not discharged in bankruptcy. And frankly, I consider bankruptcy the coward’s way out. If you’ve had a catastrophic setback, such as a major illness or the death of spouse, then there is no shame in filing for bankruptcy. But for the rest of us, there most definitely is shame in bankruptcy, or at least there should be.

The first step in getting debt under control is to stop adding to it. Cut your current expenses down to the point that your paycheck easily covers them. Next, prioritize. Higher-interest debts should be paid back first or rolled over and consolidated into something with a lower rate. After that, it becomes an exercise in lining them up and knocking them down one by one. Dedicate all free cash to eliminating one outstanding debt, and then once paid off, repeat the process on the next debt. It’s a long process but very doable if you keep the long-term goal in mind.

What are the worst things we can do when it comes to managing large amounts of debt?

The worst thing you can do is nothing. Interest compounds. That’s fantastic when it’s working for you as an investment, but it is fiscal suicide when it works against you as a borrower. Doing nothing puts you on the wrong side of compounding.

Along the same lines, attempting to pay back debts without a good game plan in place is a major mistake. Hey, any debt repayment is good debt repayment, but doing it right and prioritizing by paying back the higher-interest loans first can massively speed up the process.

You can read the full interview here.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Sizemore on CNBC: Old Enemies Come Together in Microsoft-Oracle Partnership

Watch me discuss the Sprint ($S)Clearwire ($CLWR)Softbank ($SFTBY) merger and the Microsoft ($MSFT)Oracle ($ORCL) partnership with CNBA Asia’s Bernie Lo and Oriel Morrison:

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Sizemore on CNBC Asia: “Japanese Equity Market at Extreme Risk”

Watch Charles Sizemore chat with CNBC’s Oriel Morrison about the Japanese markets and the potential for a full-blown capital markets meltdown.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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