Tim Horton's growth is slowing in Canadawe have 2597 Tim Hortons in Canada vs 288 in US....Wendy's want Canada to get FAT????? like in US....say NO THANKS!!!
Meanwhile, with its 2,885 locations located mostly in Canada, Tim Hortons has a fanatical following north of the border. The company told investors at a recent roadshow that it plans to open up to 200 new restaurants in Canada and in the U.S. this year, and post same-store sales growth in Canada of around 4% to 5%, according to RetailRoadshow.com. That compares with 5.2% growth in 2005 and 7.4% in 2004, according to a regulatory filing. Its U.S. comps rose 7% in 2005 and 9.8% in 2004.
Tim Hortons IPO Set for a Sweet Roll
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Paul House, the company's president and chief executive, said Tim Hortons could add 1,000 to 1,500 new Canadian locations by 2013, mostly in western Canada and Quebec. He said the chain wants to have 500 U.S. locations by the end of 2008, which would roughly double its current count. Also, the company plans to drive sales growth by adding to its lunch offerings, where the likes of Starbucks (SBUX:Nasdaq - news - research - Cramer's Take) also is planning to expand.
Spinoffs, where a corporation issues stock in a subsidiary to its shareholders to create a new public entity, are popular these days. They're viewed by value-hunters as one of the few remaining areas in which price inefficiencies are routinely created in a market that's growing increasingly efficient overall.
"People love pure plays, where, as investors, they know exactly what they own and they can see the cash flows and growth associated with it," Kravetz says. "So, when a lot of sunlight shines on a great asset like Tim Hortons after it's been buried in a larger, underperforming conglomerate for years, people tend to get very excited."
In many cases, freeing up an asset from a bumbling parent rewards shareholders who buy a hot IPO. Since its smashing debut, Chipotle has gained more than 18%. On the other hand, an IPO can sometimes get out of hand quickly, as many dot-com investors can attest.
For investors who buy Wendy's before the Tim Hortons IPO, one way to hedge that bet if the new shares show a pop that looks too good to be true is to sell them short, Shubin Stein says.
"If the IPO is a raving success and you short Tim Hortons after things settle out, you have effectively isolated your ownership in Wendy's business, creating what's called the stub," Shubin Stein says. "You're short the radical part of the gain in the new shares of Tim Hortons, but you're also long thanks to your investment in Wendy's. Therefore, if you lose on the short side, you're effectively credit-neutral, because you can cover those losses through your Wendy's shares when the parent spins off the rest of the new company. If you win on the short but shares of Tim Hortons still show a net gain from the initial offering price, then you're up on both sides of the trade and you just made some good money."