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The PhilStockWorld.com Money Talk Portfolio Review – Apr 24, 2019

I'll be on BNN's (Bloomberg Canada) Money Talk tonight at 7pm.

As usual, we will be reviewing our Money Talk Portfolio, which we initiated back on Sept 6th, 2017 to track the trade ideas we would introduce, live on the show, about once each quarter.  The idea of the portfolio was to select highly leveraged, high-probability trades that did not have to be adjusted very often (or at all) and, so far, it's been a tremendous success with our initial $50,000 turning into a lovely $127,663 (up 155.3%) at yesterday's close, about 18 months after we got started.

We recently reviewed the MTP back on Feb 15th and, at the time, the portfolio was at $88,922 with, of course, the exact same positions – as I hadn't been on the show since Jan.  We did send out an alert (our first ever) to dump GE shortly after that – those alerts go out free of charge on Twitter, Facebook, Seeking Alpha, etc to make sure they were available to all so make sure you follow those feeds.    Note that, for each position, we clearly define our expectations and, overall, we expected our positions to make another $76,638 at the time but we've already made another $38,741 (43%) – which is way too fast – so we have to be careful that some of our positions are overbought already.  

That's right as FUNDAMENTAL VALUE INVESTORS we believe that stocks – even the ones we like – can be too expensive, as well as too cheap.  When they are too cheap, we buy them – when they are too expensive, we sell them.  It sounds logical but how many traders actually do it when the time comes?  

Now, let's take a fresh look at what we have:

  • Alaska Airlines (ALK) – Just a short put that nets us in for $51.80.  We're not worried about it.  Expect to gain the full $4,100 so $2,650 left to gain.
  • Nasdaq Ultra-Short ETF (SQQQ) - A hedge we expect to lose on and so far, so good as we're down about $4,000 with just $450 in value left.  Still, we do need hedges so we'll buy back the short June $15 calls at 0.06 ($120).  That gives us the flexibility to profit off a Nasdaq dip – if it ever happens.  We expect to lose the remaining $600.  
  • Russell 2000 Ultra-Short ETF (TZA) – This will become our primary hedge as it's still in the money and has more time.  TZA is a 3x Ultra-Short so a 20% drop in the Russell should give us a 60% pop in TZA but, starting from $9, that only gets you to $14.40 and that would pay $6.40 per $8 contract so $25,600 worth of protection on this one is accepable as it covers a 20% drop in our portfolio.  In a bull market, we expect to lose the remaining $4,920.

  • Caterpillar (CAT) – Just had good earnings this morning so we're very confident and the stock is already over our goal.  It's a potential $15,000 spread we paid net $800 for and currently the net value is only $7,749 so this trade has another $7,251 left to gain if CAT can hold $130 into Jan 2021.  It's still good as a new trade – even if you missed the first $6,949 (868%) worth of gains!  

  • General Mills (GIS) – Notice we love to buy beaten-down blue chips!  This is an $11,250 spread that's well in the money at net $7,800 and I'm confident enough that we'll collect the remaining $3,450 (44% of the current net) that I don't mind leaving this one in play but it's right on the cusp of not being worth it as, clearly, we can do more with $7,800 over 18 months than just 44%.  

  • Barrick Gold (GOLD) – Gold (the commodity) can't seem to get things going but $1,272 an ounce is still some very healthy profits for GOLD (the company), who pull it out of the ground for under $800 an ounce.  This quarter will be worse than last year simply because Gold averaged $1,325 last year in Q1 and more like $1,275 this year so it's likely to be a rocky ride but you can still get into the $12,500 spread for net $2,050 and that makes the upside potential a very nice $10,450 (509%) if GOLD is over $17 (with the aggressive short puts puts) in January.  I do NOT think we'll make it on time, however, so I anticipate rolling this spread which means I will not be counting on any profits from it at the moment.

  • IBM (IBM) – Is our 2019 Trade of the Year so yes, I am confident we will collect our full $7,500 and the current net is $1,890, so well worth sticking with in anticipation of making another $5,610 (296%) and that's obviously still good for a new trade as who doesn't like making 300% on cash in 18 months off a spread that's starting out 100% in the money, right?

  • Limited Brands (LB) – Was our 2018 Trade of the Year along with HBI but this is a re-entry as we cashed the original when they spiked over $35.  Now back to $25 we're good for a new trade at net $4,080 on the $40,000 spread so there's $35,920 (880%) upside potential and all we have to do is get back over $32.50 by Jan 2021.  I'm pretty confident in that but let's say we strongly expect to make "just" $16,000 on this one at $27.50 and anything else is a bonus.

  • Alternative Harvest ETF (MJ) – Lovely name but these are POT companies and we love this sector for 2019 and it already loves us at net $11,400, up $10,150 (912%) from our intial $1,250 cash outlay.  At $45, it's a $40,000 spread so there's still $28,600 (250%) left to gain and I'm very confident that an ETF made up of the largest Marijuana Companies in the World can gain another 35% in 18 months so we expect to made the additional $28,600.

  • Micron (MU) – They've come back nicely and we're now at net $9,787 out of a potential $15,000 and I have no reason to think we won't collect the additional $5,213 and that's another 53% from here – so worth sticking with.  

  • Wheaton Precious Metals (WPM) – This was our 2017 Trade of the Year and this one is a triple dip for PSW players and, yet again, it's making us money.  Net is now $9,750, which is up $7,200 (282%) from our $2,550 cash outlay but, at $22.50 (and we're almost there), it's an $18,750 spread so another $9,000 (92%) left to gain and I'm super-confident in this one so I'd say good for a new trade – even if you missed the first 282% gains.  

So we do have $77,774 that we expect to gain over the next 18 months less $5,520 we expect to lose on our hedges is net $72,254, which would be up another 56.5% from our current $127,663 but we can do much better and we're very confident in our current positions and we do have hedges and we're hardly using any margin (just $30,000) so I guess we should add a couple of additional trades and make some more money, right?

See how easy it is to make these decisions when you know EXACTLY what to expect from your portfolio!  

Since we're going to be on BNN in Canada this evening, how about we start with the Bank of Nova Scotia (BNS), who were a Top Trade Idea at PSW on March 20th and haven't gone anywhere since (isn't that great?):  

Year End 31st Oct 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
Revenue C$m 21,597 23,944 24,049 26,350 27,155 28,775 29,291 31,073 33,079 +5.9%
Operating Profit C$m 8,347 9,300 9,066 9,398 10,276 11,106 10,805     +5.9%
Net Profit C$m 6,379 7,071 7,014 7,117 8,005 8,548 8,405 8,963 9,512 +6.0%
EPS Reported C$ 5.11 5.67 5.67 5.77 6.49 6.82 6.67     +5.9%
EPS Normalised C$ 5.11 5.67 5.67 5.77 6.49 6.82 6.67 7.24 7.79 +5.9%
EPS Growth % -1.2 +10.8 +0.03 +1.7 +12.5 +5.1 -1.7 +6.16 +7.72  
PE Ratio x           10.8 11.0 10.2 9.45  
PEG x           1.75 1.79 1.32 0.81
Profitability

What's not to love?  $67Bn at $54.50 and they are dropping $8.7Bn to the bottom line while paying a lovely $2.65 (5%) dividend!  Apparently, on the Toronto Exchange, they have options out to 2021 so they could even be a good Butterfly play for Canadians but, in the US, options only go out until Dec but still worth it so let's:

  • Buy 20 BNS Dec $50 calls for $5.30 ($10,600) 
  • Sell 20 BNS Dec $55 calls for $2.05 ($4,100) 
  • Sell 10 BNS Dec $55 puts for $3.00 ($3,000) 

That's net $3,500 on the $10,000 spread that's starting out just 0.50 out of the top of the range.  It's aggressive as you are obligating to buy 1,000 shares of BNS at $55 ($55,000) and it will use about $11,000 in margin but only through December and we've got plenty sitting around.  If all goes well, this trade will return $6,500 (185%) on cash in 8 months.  

Our next pick is one that has been baffling to me and that's Natural Gas, which we'll trade through the ETF (UNG).  While natural gas production has been skyrocketing, so has consumption, as more and more of it is being shipped out of the country in liquefied form (LNG) and, though demand has so far kept up with supply, we feel that any sort of disruption in demand, which is very common in the fall hurricane season, could quickly escalate prices so we want to construct a play that keeps us in the right place, while we wait for it to be the right time as well.

U.S. LNG export capacity

For the MTP, let's:

  • Sell 10 UNG 2021 $20 puts for $2.55 ($2,550) 
  • Buy 10 UNG 2021 $15 calls for $7.30 ($7,300) 
  • Sell 10 UNG 2020 $22 calls for $2.10 ($2,100) 

The net cash outlay of this $7,000 spread is $2,650 so the upside potential is $4,350 (164%) over the next 20 months but it's really better than that as our longs are Jan, 2021 and the short calls are Jan 2020 so they will expire quicker and, if not deep in the money, we should be able to sell more calls and drop our basis another $2,000+ to almost nothing!  

The short puts require just $2,574 in ordinary margin so this is a nice, efficient trade from a margin perspective (returns more than 100% of required margin) and again, we have plenty to spare in this very conservative portfolio.

Notice again how, for every trade, we have a clear plan and clear targets so that, at any given moment, we know if we are on or off track.  We KNOW how much we expect to make (now $83,104 with the 2 new trades that are aiming to make $10,850) and we KNOW how much our hedges will make on a 20% market drop ($34,440 at $14.40 on SQQQ and TZA) to offset some of our long losses and that plus our portfolio's $76,135 (60%) CASH position means even a severe downturn is unlikely to hurt us very much.

CONTROL.  Control and BALANCE are the keys to successfully managing a portfolio and, if you have those things – you can run a portfolio you only touch once per quarter that still makes market-beating returns.  It's not about active investing – it's about KNOWLEDGEABLE INVESTING!

We'll discuss more of this in our Live Trading Webinar today at 1pm, EST and, of course, I'll be on BNN's Money Talk with Kim Parlee at 7pm this evening.  

If you want to learn all about how to take control of your portfolio and learn how to invest with total confidence – you can sign up for our Live Member Chat Room over at PhilStockWorld.

 


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  1. Good morning!

    Yes, this is Wednesday's post…


  2. Rolling out the new lines although it looks like we might need to move them up already… NYSE and Russell unchanged though as they lagged behind.


  3. These trade talks are a joke – they only mean to go back to where we were 2 years ago before we all started imposing sanctions! And yet, the marker goes up each time like something new and better will be in place. 


  4. A history of the 12 bull runs:

    https://www.cnn.com/2019/04/23/investing/bull-market-history/index.html

    Gotta end sometimes…


  5. Barry's take on Warren's plan to have an AMT for businesses:

    https://ritholtz.com/2019/04/amt-for-corps/

    But those unprofitable companies are not the target of Warren’s ire — she is instead aiming at the biggest companies that have successfully avoided paying taxes via overseas accounting maneuvers. The senator estimates her proposal would apply to about 1,200 of the most profitable businesses in the U.S. The first $100 million in profits would be exempt; the 7 percent tax would apply to all profits over that.

    What is a bit surprising is that Warren singled out Amazon but not Apple, which is the poster child for U.S. corporate-tax avoidance. A substantial portion of its $245 billion cash hoard can be attributed in large part to its success in skirting taxes despite its immense profitability.  In 2018, Apple’s net income was $59.4 billion; under Warren’s proposal, Apple would have owed about $4.15 billion in additional taxes.

    Warren’s plan is clever in a number of subtle ways. The first is that it will operate as an alternative minimum tax for the biggest most profitable companies, such as Apple, Amazon and plenty of others. The second is it implicitly acknowledges antitrust and monopoly concerns raised by critics like Scott Galloway of the largest and most successful corporations.


  6. Morning All!

    It's webinar day! And it's BNN day too! (Catch Phil twice today!)

    https://attendee.gotowebinar.com/register/8955150971670033165


  7. Good Morning!


  8. Phil,

    how do you place your trades ? Do you wait for the shorts to fill first or the longs or do you set all the trades with the prices you want and just wait ?

    Thanks


  9. Good morning!  

    A little bit of selling at the open but nothing to worry about and no particular news. 

    New lines/StJ – Well not helping too much at the moment but should be useful on a pullback.  Thanks for adjusting. 

    As to the bull run ending, I don't know as you have to consider that shares of stock are certainly more valuable than Dollars and Trump is creating 5% more debt per year and you can pretend any BS you want re. Dollar value but wealth knows the difference and I'd much rather have a share of IBM than $140 US Dollars if I had to put one or the other in a safe for 10 years, right?  

    I think, at some point, we're going to see a commodity rally that keeps going and going as well.  

    Warren/StJ – One can only pray people listen.

    Oops, not a good start for BNS:

    • The loonie falls 0.6% against the U.S. dollar as Canada's central bank keeps its key interest rate unchanged at 1.75% and now sees H1 growth in Canada slower than it expected in January.
    • "Last year’s oil price decline and ongoing transportation constraints have curbed investment and exports in the energy sector," the Bank of Canada statement says.
    • Outside of the energy sector, uncertainty over trade policy and the global slowdown is also hurting investment and exports, it said.
    • Says "accommodative policy interest rate continues to be warranted."
    • Sees Canada real GDP growth at 1.2% in 2019 and about 2% in 2020 and 2021

    Filling/Gardling – I kind of swing trade my legs so I fill a few at a time at the high and low of the 10-min channels or, perhaps I have a bias and quickly grab say, the calls and sell the puts and then wait a while to sell short calls if I think something is way too low.  In general, I find that if I just ask for a price and give it a week or two, I generally can get a fill I want in both directions.  I think mostly people are too impatient with filling – that goes for Futures too.  

    Also, you have to have realistic expectations, BNS, for example, is thinly traded – it's going to take a while to fill those legs.  The $50 calls filled at $5.20 this morning but, so far, the $55s are only $1.90 so I'm happy to take the $50s below my price but I won't sell the short calls for less than $2 so I'll just wait (unless things change).  The $55 puts went off at $3.20 so now the puts are +0.20 and the calls we're +0.10 (in our favor) which means we could go -0.30 on the short calls ($1.75) and still get the net we wanted but, like I said – I don't see why we shouldn't get $2 as BNS is only down on the BOC's note above but based on US banks' earnings and rising oil prices, I don't see BNS (2/26) disappointing as the expectation is $1.33 and they made $1.29 last year – so not a very high bar being set and they've beat the past 3 Qs.   So all good reasons to be patient….


  10. Oops, that's 5/26(ish) earnings on BNS.  


  11. Pre-Interview questions from BNN:

    INTRO:   Welcome to MoneyTalk.  Coca Cola, United Technologies and Twitter are just some of the big cap companies that reported earnings beat this quarter and lead the S&P 500 and the Nasdaq to record high levels.  But with the economy in its late cycle, will the market ascent ease up or even fall apart?  Joining me is options strategist Phil Davis, founder of philstockworld.com and PSW Investments. Phil joins us from Fort Lauderdale.

    Talking Points:

    • Phil, less than 6 months ago, the markets saw a steep decline, prompting many to call the end of the longest bull market in history.  And here we are sitting at record high levels for the Nasdaq and S&P 500.  What do you make of this rise?

    ?We have been very skeptical of the market rally, especially as we've broken above the Fall highs again but, just last Wednesday I reviewed the top 10 stocks on the Nasdaq, thinking I would find them wanted at the 8,000 level yet, surprisingly, they scored much better than I thought and those 10 stocks are 40% of the Composite by weight and close to 50% of the Nasdaq 100 so – if they are holding their value at 8,000 – it's hard to simply dismiss the rest of the market's potential to hold and even build on these levels – especially if the trade and Brexit nonsense gets resolved.  

     

    • Is the earnings growth sustainable? (being late in the economic cycle)

    ?I think we are in the beginning of an automation super-cycle that can drive earnings growth for years to come.  That won't necessarily be good for humans but it's great for corporations as AI and Robotics make every aspect of what they are doing more efficient – driving revenues to the bottom line.  

    Image result for automation efficiency chart

    • Staying with the markets. We've seen a slew of big IPOs this year (Lyft, Zoom, PagerDuty, and Pinterest), and still expecting the biggest one of them all to come – UBER.  Why are we seeing all this IPO activities? And what is it saying about the markets?

    I think the IPO activity indicates the big Banks, in the least, are worried the markets are toppy and they are rushing their clients to market as fast as possible to grab as much as they can while the liquidity is still out there.  People who survived the crash of 2008 know how fast money dried up once the market turned sour and a lot of these companies won't survive long enough to ride out a crash the way they are burning through money – so it's now or never for a lot of them.

    • What are you doing with your money? Are you tempted to follow the notion of "sell in May, go away"?

    We are bullish due to FOMO but generally "Cashy and Cautious" with lots of hedges and lots of cash on the sidelines.  We still see plenty of bargains out there but we are purging our overbought stocks and sticking with the real value plays – ones we don't mind riding out if the markets turn ugly. 

    On the whole, I'd love to go liquid and take the summer off – unfortunately, that's not what they pay me to do!   

     

    • Let's move on to something you follow closely – Oil. Oil prices hit fresh 2019 highs after Washington announced plans to slash Iranian crude exports. (The Trump administration will no longer grant sanctions waivers that allow limited purchases of Iran’s oil – including China, India, Japan).  Do you expect these countries to stop buying oil from Iran?

    Iran only exports 1.8Mb of oil per day so it doesn't have the effect people think it does on the global markets, the capacity of Iran is less than the capacity OPEC is holding back to balance production to the low demand.

    Image result for iran oil exports

    Even if we "cut them off" they'd still sell half their oil on the black market and then we'd have uncounted inventory builds all over the place.  Realistically, China is not likely to obey the sanctions but the other countries will  and China's action would give Trump another excuse not to complete a trade deal – which is what I think he really wants in the end. 

    • What does this mean for oil prices?

    ?They were going to be around $70 for the summer anyway and I don't see this changing things much – other than making a bullish bet in the low $60s and even safer-looking play. 

    • If China keeps buying oil from Iran, could that derail a US-China trade deal, which the market is expecting to come?

    ?Yes, May 3rd is the cut-off date so we can loo for some fireworks at the end of next week.  We'll certainly be pressing our hedges into next weekend!



  12. Trump camp descends on Pennsylvania as alarms grow over 2020


  13. ‘No collusion’? I managed Russia operations at the CIA. Read between the lines.






  14. Why You Can No Longer Get Lost in the Crowd



  15. Wow, this volume is insanely low – never a good thing when you are making new highs:

    Date Open High Low Close* Adj Close** Volume
    Apr 24, 2019 292.79 293.15 292.31 292.68 292.68 18,330,413
    Apr 23, 2019 290.68 293.14 290.42 292.88 292.88 52,181,300
    Apr 22, 2019 289.17 290.44 289.07 290.27 290.27 40,160,100
    Apr 18, 2019 290.10 290.32 288.66 290.02 290.02 68,708,500
    Apr 17, 2019 291.40 291.43 288.99 289.45 289.45 58,268,300
    Apr 16, 2019 290.95 291.01 289.50 290.16 290.16 52,153,200
    Apr 15, 2019 290.24 290.35 289.08 289.97 289.97 49,596,700
    Apr 12, 2019 290.00 290.47 288.26 290.16 290.16 69,727,800
    Apr 11, 2019 288.83 288.84 287.58 288.21 288.21 55,093,100
    Apr 10, 2019 287.77 288.39 287.31 288.29 288.29 52,601,500
    Apr 09, 2019 287.72 288.08 286.70 287.31 287.31 66,142,300
    Apr 08, 2019 288.10 288.91 287.37 288.79 288.79 53,566,300
    Apr 05, 2019 287.92 288.63 287.60 288.57 288.57 58,621,700
    Apr 04, 2019 286.78 287.46 286.01 287.18 287.18 48,997,500
    Apr 03, 2019 287.32 287.76 285.75 286.42 286.42 68,243,200
    Apr 02, 2019 286.04 286.23 285.09 285.97 285.97 40,070,400
    Apr 01, 2019 284.70 286.16 284.40 285.83 285.83 77,617,900

    We haven't cracked 100M on SPY since 3/22.  

    And, by the way, why are we not rallying behind this guy?

     


  16. "We are completely rebuilding our military. It was very depleted as you know. A lot of the military folks can tell you," Trump said to a group of children at the WH Easter Egg Roll

    It's really funny with the Bunny standing next to him!  

    Former Homeland Security Secretary Kirstjen Nielsen was warned not to brief President Trump on possible Russian interference in the 2020 presidential election, according to The New York Times.

    Acting White House chief of staff Mick Mulvaney reportedly warned Nielsen not to bring the topic up in front of the president, despite Nielsen's concern that the Russians would attempt to influence another U.S. election.

    Mulvaney reportedly said it “wasn’t a great subject and should be kept below [the president's] level."

    The reported warning came amid special counsel Robert Mueller's nearly two-year investigation of Russian interference in the 2016 presidential election, including whether Trump or his associates cooperated in the effort.

    Donald Trump's day so far: – Accuses Obama of spying on him again – Makes up a fake caravan again – Threatens to close the border again – This guy is a broken record of stupidity – Impeachment is coming and he knows it – Trump is going to prison

    The Mueller Report, despite being written by Angry Democrats and Trump Haters, and with unlimited money behind it ($35,000,000), didn’t lay a glove on me. I DID NOTHING WRONG. If the partisan Dems ever tried to Impeach, I would first head to the U.S. Supreme Court. Not only……

    "Didn't lay a glove on me" is not what not guilty people usually say.  

    The year is 2023. No publicly traded companies exist anymore as central banks bought them all

     

    What if a bold agenda rooted in improving everyday people’s lives is part of a winning strategy? What if the choice btwn big ideas+winning elections is a false one that crept up through outsize influence of????in politics? What if, in a nation parched for change, we were water?????

     

    Last quarter, Susan Collins collected more donations from fossil fuel companies based in Texas than residents of her own state. Last week Collins voted to confirm David Bernhardt, a former oil lobbyist, to lead the Department of the Interior. This is how broken our system is.

     

     

    Webinar time 


  17. Oil inventories were BAD for oil.  Holiday weekend and they had a net 9Mb build. 

    Same strategy as all week, short at $66 or $66.50 with tight stops above.  If it wasn't for Iran nonsense, this would be a no-brainer.   

    Hopefully we can hit $2.15 on /RB again as that's a great shorting line too.

    Dollar still climbing:




  18. CMG reports after the close.

    Could be very interesting !


  19. albo:

    Are you still holding  CTL


  20. CMG/Albo – That's a sore spot for us, hopefully they let off a bit of steam.  


  21. D Clark  YES.   This is a recent report from Southeastern Asset Management who owns more than 6 % of the shares.

    CenturyLink , the fiber and telecom company, was the primary detractor to first quarter returns after a dividend cut. We were disappointed by that decision and filed a 13-D to enable us to become more active in the investment through seeking to improve the board, encouraging opportunistic asset sales and exploring creating tracking stocks for the company’s two segments. Private-market transactions of assets comparable to some of CenturyLink’s (CTL) fiber assets have been over 15X EBITDA, far above CTL’s depressed 5X EBITDA stock price. In addition to monetizing some of this fiber, separating the enterprise and consumer segments into distinct tracking stocks could help highlight the values and different opportunity sets for both. We believe that adding board members with experience in fiber and financial transactions can bring additional capital allocation discipline to drive value recognition. We maintain our support for Jeff Storey and his team operationally even while disagreeing about some capital allocation items. Storey bought $1 million in shares personally in the quarter, and CFO Neel Dev, as well as multiple directors, also increased their ownership of the stock.

    FWIW.  Buying the stock here and selling the Jan 13 call for .80 sets up a 13.3% return in 9 months.  If called away it's a 25% return.


  22. Phil.  Also hoping for a sell off.


  23. albo:  

    I have a very small position.  Looks like it will make a double bottom and hold, if earning don't suck too bad on 5/8.  (T) didn't help.  Very little reason, that I can see to add here.  So I wait.  THX


  24. CMG with a very scary pop to $740 before settling back down.  Earnings way up but still "only" $3.40 (best light) so $14/year (best case) still very light for a $700 restaurant stock.  

    EPS INCREASES 46.9% AS RESTAURANT MARGINS EXPAND TO 21%, AND SALES COMP ACCELERATES TO 9.9%

    NEWPORT BEACH, Calif.April 24, 2019 /PRNewswire/ -- Chipotle Mexican Grill, Inc. (CMG) today reported financial results for its first quarter ended March 31, 2019.

    First quarter highlights, year over year:

    • Revenue increased 13.9% to $1.3 billion
    • Comparable restaurant sales increased 9.9%, net of 30 bps from loyalty deferral, and included 5.8% of comparable restaurant transaction growth and 2% in mix contribution
    • Digital sales grew 100.7% and accounted for 15.7% of sales for the quarter
    • Restaurant level operating margin was 21.0%, an increase from 19.5%
    • Diluted earnings per share was $3.13, net of a $0.27 after-tax impact from expenses related to restaurant asset impairment, corporate restructuring, and certain other costs, a 46.9% increase from $2.13. Adjusted diluted earnings per share excluding these charges was $3.40, a 59.6% increase from $2.13.1
    • Opened 15 new restaurants and closed 2

    1 Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures. Reconciliations to GAAP measures and further information are set forth in the table at the end of this press release.

    "The on-going improvement in each of our key operating metrics over the past few quarters gives us confidence that our mission to win today and cultivate the future, is resonating," said Brian Niccol, chief executive officer. "This is the fifth consecutive quarter of accelerating comps, which reinforces our view that when we connect with guests through culturally relevant marketing focused on Chipotle's great taste and real ingredients, and provide more convenient access with less friction, they respond enthusiastically."

    Results for the three months ended March 31, 2019:

    Revenue for the quarter was $1.3 billion, an increase of 13.9% from the first quarter of 2018. The increase in revenue was driven by a 9.9% increase in comparable restaurant sales and new restaurant openings. Comparable restaurant sales improved primarily as a result of a 5.8% increase in comparable restaurant transactions and included a 30 basis point negative impact as a result of deferred revenue from our Chipotle Rewards loyalty program.

    We opened 15 new restaurants during the quarter and closed 2, bringing the total restaurant count to 2,504.

    Food, beverage and packaging costs were 32.2% of revenue, a decrease of 20 basis points compared to the first quarter of 2018. The decrease was primarily due to the modest menu price increase at the end of 2018, partially offset by an increased demand for steak (a higher priced ingredient), and higher paper cost.

    Restaurant level operating margin was 21.0% in the quarter, an improvement from 19.5% in the first quarter of 2018.  The improvement was driven primarily by comparable restaurant sales increases and lower repair and maintenance expense, partially offset by wage inflation, increased marketing and promotional cost, and delivery expense associated with increased delivery sales.

    General and administrative expenses were 7.8% of revenue for the first quarter of 2019, an increase of 110 basis points over the first quarter of 2018. In dollar terms, general and administrative expenses increased compared to the first quarter of 2018 primarily due to $13.1 million in increased performance bonus expense including: non-cash stock-based compensation,  bonus expense, and associated taxes; $3.4 million in outside service expense related to company initiatives to support restaurant growth, including digitizing and modernizing our restaurant experience; $4.3 million related to restructuring; and $1.3 million in other expenses.

    The effective tax rate decreased to 22.2% in the first quarter of 2019, compared to 36.9% in the first quarter of 2018.  The decrease was primarily due to unfavorable discrete tax items in the first quarter of 2018 including equity vesting at an amount less than original book value and negative impacts from tax reform, and favorable discrete tax items in the first quarter of 2019 related to stock option exercises.

    Net income for the first quarter of 2019 was $88.1 million, or $3.13 per diluted share, compared to net income of $59.4 million, or $2.13 per diluted share, in the first quarter of 2018. Excluding the impact of restaurant asset impairment, corporate restructuring, and certain other costs, adjusted net income was $95.5 million and adjusted diluted earnings per share was $3.40.

    Outlook

    For 2019, management is anticipating the following:

    • Mid to high single digit comparable restaurant sales growth, up from the prior mid-single digit growth expectation
    • 140 to 155 new restaurant openings
    • An estimated underlying effective full year tax rate on the low end of the previously disclosed range of 27.0% and 30.0%, excluding the potential impact of excess tax deductions from equity vesting or exercises

    Estimates for the year are $12.47 so on track for a mild beat but even 40 x $14 is $560 – not $700!!!

    MSFT very solid, could be our first real $1Tn company at $960Bn pre-earnings so 3.5% away.

    I'm off to the studios.


  25. Elon says on 1/30/2019 that he is confident that Q1 and all future quarters will be profitable a and then loses $700M in Q1!  Stock basically unchanged AH.  Simply breathtaking.


  26. Trump Backed Libyan Strongman’s Attack on Tripoli, U.S. Officials Say






  27. Tesla toils in first circle of ‘production hell’