quote:
It's down almost 50% from 11 months ago. The slide had already begun as the brand fell out of favor and PR problems mounted, but you might find some value if it sinks lower.

Normally I have a policy when I'm buying stocks. Never try to catch falling knives.

Papa John's is starting to look really tempting, but I think it's still a risky buy right now. I think it's gonna bottom out around the mid 20s tbh, but even then, I don't think it's a homerun.

The problem with this company is that they don't have huge profit margins even when their gross sales are peaking. They spend more on production than their competitors, so they need to outsell them and right now, they're not doing that. They'll be back, but it could take a long time, and there's also the possibility John says frick it and sells his shares and moves on to another business.

I bought 200 shares of Domino's in 2011 at around $40, obviously I am happy with that decision. At that point, they were launching an aggressive new marketing campaign, they were way ahead of Pizza Hut and Papa John's in easy ordering technology.

There was a Domino's store around the corner from my apartment in Chesapeake, and it was going gangbusters. Every day I drove by and there were lines of people waiting to pick up their online orders, delivery drivers were rushing in and out all day. They had added oven baked sandwiches to their menu, and they were selling like hotcakes.

I saw the value irl, I didn't need to analyze the data, it was easy to see where they were going. Only wish I had looked at them in 2008 when they were at $3 a share. I'd be posting this from an island in Tahiti, while getting a blowjob from an OT 9.

If I were to buy Papa John's, I'd need to see more than a low stock price, I'd need to see something that makes me feel like I'd regret not being in on this.

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Posted by Arksulli

Fayetteville

Member since Aug 2014

25223 posts

Posted on 8/1/18 at 5:20 pm to Vols&Shaft83

quote:
Never try to catch falling knives.

Truer words were never spoken when it comes to buying stocks.

As you said, even when they were doing good business they weren't making a lot of profit. Every restaurant chain is going to go through bad publicity at some point in time... witness Chipotle writhing in the coals for the last year or so after their "organic" food caused people to crap out their guts.

When you get that run of bad publicity and your profit margins aren't high to begin with then you can lose a lot of value in a very short period of time.

No one is really sure of the net income of Chik-Fil-A but considering the average store does something like 4.5 million a year (which I can easily believe since the CFAs here in Memphis are packed at all hours of the day) I'm guessing they can take the occasional hit because of their religious beliefs and still line some pockets nicely thank you.

Is Papa John's really that desirable as an investment? Honestly, I've had their pizza and Domino's... and I'd take Domino's.

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Posted by Barstools