Jollibee And Smashburger

One of the most loved stocks in the PSE does it again and continues its path to expand its footprint outside the Philippines. For those who are new to the market and don’t know Smashburger JFC bought 40% of the US based burger joint for 100 Million US Dollars last 2015.  They pushed the envelope again this year by paving the way to buy more shares in the next few years.

45% more of Smashburger

To the Jollibee faithful. The company’s subsidiary Bee Good! Inc. now has the ability to buy 45% of Smashburger next year. With an option to buy the remaining 15% from 2021 to 2026.

As JFC currently owns 40% of Smashburger it could own the entire company by 2021. This gives JFC a larger exposure to foreign markets as it tries to hit its ambitious goal to receive 50% of its income from foreign markets by 2020. Either way this is such an amazing story of a local company trying to make strides globally.

Fundamentals

On a fundamental aspect, the stock still is poised to grow and expand its earnings for years to come. The company currently has an ROE of 17.03, a growing EPS that has been quite steady through the years.  To balance everything out the stock still remains relatively expensive at almost 40x P/E.  For investors in spite of the good news it might be more prudent to come in once the stock becomes a bit more cheaper.

Technicals

While looking at the technicals, the company is still in a downtrend with no clear bullish reversal signals as of the moment. For trend followers, no matter how good the news is if the stock is still in a downtrend it would be prudent to avoid the stock first until we find anything significant showing that the trend is moving towards another direction. Over the short term if it fails to hold above 192 the stock could retrace lower over the short term to 184.

For a full reversal upward to happen the stock must breakout of 228.  Which at this point is still relatively far.

If you have not invested yet

To those who are not yet invested in the stock market, instead of just spending your cash in Jollibee, why not be a shareholder of the company? Learn the ropes first by buying companies with a solid track record and have an amazing brand (like Jollibee) that can stand the test of time. I really dream of a day that we will have 10 Million Filipinos investing in the stock market.