A humorous look at the companies that caught our eye, for better or worse, this week
Sad: Spending all of your waking hours on Facebook playing games like FarmVille and Mafia Wars. Sadder: Investing in the company that makes those games. After soaring in the months after its December IPO, Zynga’s stock has collapsed as gamers lose interest and investors question the company’s viability in the mobile age. With Zynga cutting its full-year guidance for a second time, this game is suddenly no fun at all.
“Grandpa, tell me about desktop PCs again."
“Well, they were these really big computers …”
“You mean bigger than tablets and smartphones?"
“And what happened to the companies that made PCs?”
“Grandpa shorted them and made a killing, son.”
Chipotle Mexican Grill
Sure, burritos taste great – but a few hours later you pay the price. Sort of like investing in Chipotle Mexican Grill: After quadrupling in value in less than three years, the shares are suddenly stinking up the joint – much to the delight of hedge fund manager David Einhorn. The renowned short seller is betting against Chipotle, citing its lofty P/E and competition from Taco Bell’s new Cantina menu.
Things that are highly predictable:
1) Stephen Harper having perfect “hair”;
2) Toronto sports teams missing the playoffs;
3) Enbridge making more money year after year. Driven by $30-billion of “secured” and “highly certain” projects, the pipeline giant is forecasting annual earnings growth of 12 per cent over the next five years, with dividends expected to climb by a similar amount. Put that in your pipeline and smoke it.
Who’s afraid of big, bad Target? Not Dollarama, apparently. Shares of the Canadian retailer are on a roll, driven by new store openings and the addition of higher-priced items. The stock got another boost this week when Barclays Capital predicted that Dollarama will probably benefit from an increase in traffic when a Target opens nearby. Investors are filling their shopping carts with stock.