Dividend Growth Investing

dividends stocks investing

  • Home
  • About
  • Bookstore
  • Returns Calculator
  • Portfolio
  • Getting Started

Recent Buy: Cracker Barrel

December 24, 2019 by Mike M Leave a Comment

You’re tired and hungry after a long grueling road trip.  There’s a McDonalds at every rest stop but you’re just not in the mood.  After all, you already had McDonalds for breakfast and stopped at two others to use the bathroom.  At the same time, you don’t want to go too far into town.  The traffic on main roads right now feels too daunting after being in the car for 8 hours.  You come to an exit and to your delight, in the distance, you see a large rustic old-west general store.  This building is none other than Cracker Barrel; a 1900s-like southern restaurant chain.  I found Cracker Barrel to have a unique business model, allowing it to compete with more established chains.  I opened up a very small position and plan on adding more soon.

Cracker Barrel Old Country Store (CBRL) operates 660 restaurants across 45 states.  Most of these locations are in the Southern U.S. and Midwest.  Restaurants feature an old west motif with a connecting gift shop.  When I visited our location here in Northern Indiana, I ordered the country fried turkey with mashed potatoes and mac n’ cheese.  Each meal came with a generous serving of biscuits.  The food was moderately priced, service was prompt, and portions were huge.  We ate at around 12pm and were so full we didn’t need to eat dinner that day.  After lunch I purchased a couple of Christmas gifts and bought myself a handmade all-natural bar of mint lavender body soap.  There are many great restaurant chains out there, but Cracker Barrel is different.

Aside from the old-style gift shops attached to the restaurant, Cracker Barrel has a unique competitive moat other chains don’t have.  The locations are primarily found on interstate highway exits.  Per my example above, the locations give reprieve to weary travelers, allowing the chain to stand out among much larger resource rich competitors.  On the financial side, CBRL pays a 3.3% dividend covered by a 54% payout ratio.  Sales and earnings have risen handily over the past decade.  Revenue even held up strong coming up flat during the financial crisis.  Even better, the company carries a debt-to-equity ratio of 1.6, which is decent.  The stock appears fairly valued, trading at a P/E of 17, close to its historical average.

Cracker Barrel is also expanding via acquisitions by purchasing Maple Street Biscuit Company for $36 million in cash.  From a safety standpoint the company isn’t nearly as secure as businesses like Starbucks or McDonalds.  These companies are priced to perfection and carry hefty valuations.  Cracker Barrel, on the other hand, is still a very solid business.  It also carries a much higher dividend yield, a lower valuation, and appears to have more opportunity to expand.  Their market cap is only $3.9 billion and they only have 660 stores.  I called CBRL a junior position because, like Honeywell, I only purchased a couple of shares.  I’m still averaging in but I’m also trying to build up another significant cash position.  If the market is going to correct, I want to have ample funding for the opportunity.

DISCLAIMER: I am long on CBRL and HON.  I am not a licensed investment adviser or tax professional. I am not liable for any losses incurred by any parties. This blog should be viewed for entertainment and/or educational purposes only. Any transactions published are not recommendations to buy or sell any securities. Please consult with an investment professional before making investment decisions.

Filed Under: Portfolio Update Tagged With: buy, cracker barrel, dividends, earnings, food, restaraunts, retail, stocks

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Dividend Investors:

Subscribe here for my latest content!

Connect with me on social media!

Featured Book:

Click the above image to see on Amazon.

Recent Posts

  • January 2021 (1)
  • December 2020 (1)
  • November 2020 (1)
  • October 2020 (1)
  • September 2020 (1)
  • July 2020 (1)
  • June 2020 (2)
  • May 2020 (1)
  • April 2020 (2)
  • March 2020 (1)
  • February 2020 (1)
  • January 2020 (1)
  • December 2019 (2)
  • November 2019 (2)
  • October 2019 (3)
  • September 2019 (5)
  • August 2019 (2)
  • July 2019 (1)
  • June 2019 (3)
  • May 2019 (3)
  • April 2019 (2)
  • March 2019 (1)
  • February 2019 (1)
  • January 2019 (2)
  • December 2018 (2)
  • November 2018 (2)
  • October 2018 (1)
  • September 2018 (2)
  • August 2018 (2)
  • July 2018 (2)
  • June 2018 (3)
  • May 2018 (3)
  • April 2018 (3)
  • March 2018 (3)
  • February 2018 (2)
  • January 2018 (2)
  • December 2017 (3)
  • November 2017 (2)
  • October 2017 (2)
  • September 2017 (3)
  • August 2017 (3)
  • July 2017 (4)
  • June 2017 (3)
  • May 2017 (3)
  • April 2017 (3)
  • March 2017 (3)
  • February 2017 (2)
  • January 2017 (3)
  • December 2016 (3)
  • November 2016 (2)
  • October 2016 (3)
  • September 2016 (2)
  • August 2016 (4)
  • July 2016 (4)
  • June 2016 (3)
  • May 2016 (3)
  • April 2016 (4)
  • March 2016 (5)
  • February 2016 (4)

Calendar

March 2021
M T W T F S S
1234567
891011121314
15161718192021
22232425262728
293031  
« Jan    

Disclaimer

I am not a licensed investment advisor or tax professional. I am not liable for any losses incurred by any parties. This blog should be viewed for entertainment and/or educational purposes only. Any transactions published are not recommendations to buy or sell any securities. Please consult with an investment professional before making investment decisions.

Privacy Policy

This blog does not collect any personal information except that which is freely shared publicly. I will never sell personal information of any visitors for any purpose.

Disclosure

This blog may have third-party ads served up at any time. I do not make any claims to accuracy of these ads, and these ads do not necessarily represent this blog's views or opinions. I will note any Affiliate partner links I recommend and receive compensation for. We may also publish articles that are paid for by third-party advertisers, and these will be categorized as sponsored posts.

Copyright © 2021 · Author Pro Theme on Genesis Framework · WordPress · Log in

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

SAVE & ACCEPT