Tim Horton's IPO Starts Trading On Thursday!
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One thing I forgot to mention is that Tim Horton's IPO is set for Thursday.
The stock will trade on the TSX and NYSE under the symbol THI.
Here are some comments from a Reuters news article:
No. 3 U.S. burger chain Wendy's International Inc. <WEN.N> is due to sell a roughly 15 percent stake in its Canadian coffee-and-doughnuts chain Tim Hortons Inc. on Thursday. The deal would be worth about $551 million if it prices at the midpoint of its forecast range.
IPO analysts said Tim Hortons, which operates the largest restaurant chain in Canada, will likely meet with a warm investor reception in light of the strong performance of another recent fast-food spin-off. Shares of Chipotle Mexican Grill Inc. <CMG.N> doubled in their January debut after McDonald's Corp. <MCD.N> spun off the casual chain in an IPO.
"Hortons will do very well, it looks like a really good company," said Tom Taulli, author of "Investing in IPOs." "We've seen some hot restaurant IPOs lately. At some point that'll die down, but it looks like this one will do well."
But analysts cautioned investors against getting carried away in first-day bidding for the shares. Wendy's plans to sell its remaining 85 percent stake in Tim Hortons by the end of the year, and that flood of supply could pressure the shares, which are to be listed on the NYSE under the symbol "THI." <THI.N>
Francis Gaskins, president of independent research firm IPO Desktop, of Marina del Ray, California, said that at the $19 midpoint of its price forecast, Tim Hortons shares would be valued at 23 times projected earnings
Wendy's shares were trading at $65.38, up 48 cents on the NYSE on Friday, putting its forward price-to-earnings ratio at 27, according to Reuters data.
"It's coming at a P/E ratio lower than the parent Wendy's, which is quite a discount. So it's a marketing ploy," Gaskins said. "They cannot afford to have a broken IPO for a 15 percent offering. They're trying to create a marketing buzz."
I am willing to predict that the first day, Tim Horton's will go up at least 40%.
Wendy's is only releasing 15% of the shares to create a hype unlike we've seen since the Tech Bubble.
Every time I walk or drive by a Tim Horton's I see masses of people waiting in line to buy something.
Whether you want to buy or not is your decision but I don't think I'll be buying because I'd rather stick to the go-to sectors in the market right now: energy and commodities.
But if you like to diversify or want to get some money back for all the money you've spent buying coffee and donuts, go for it!