Core Viewpoint - The article highlights three blue-chip stocks—Costco, Home Depot, and McDonald's—as solid dividend investments that have consistently increased their payouts and are currently trading near their 52-week lows, making them attractive options for long-term investors seeking income [1][2]. Costco Wholesale - Costco's stock is currently trading around $945, which is less than 12% away from its 52-week low of $844.06, with flat returns over the past 12 months [3] - The company has generated $8.3 billion in net income on revenue of $280.4 billion in the trailing 12 months, showcasing strong financial performance [6] - Costco's dividend yield is modest at 0.53%, but it has increased its quarterly payout by 86% over the past five years, and it occasionally issues special dividends [7] Home Depot - Home Depot's stock is down 4% over the past 12 months and is about 14% away from its 52-week low of $326.31 [8] - The current dividend yield is 2.45%, which is more than double the S&P 500's average yield of 1.1%, and the quarterly payout has increased by 53% from $1.50 in 2020 to $2.30 [9] - Home Depot's net income totaled $14.6 billion on sales of $166.2 billion over the trailing 12 months, indicating strong profitability [11] McDonald's - McDonald's stock closed at just under $307, within 11% of its 52-week low of $276.53, with a P/E multiple around 26 [12] - The stock pays a dividend yield of 2.4%, and it is expected to increase its dividend for the 50th consecutive year in 2026, with the current quarterly dividend at $1.86, up 44% from $1.29 five years ago [13] - Over the past four quarters, McDonald's reported $8.4 billion in profit on sales of $26.3 billion, achieving a profit margin of 32% [15]

Core Viewpoint - The article discusses the potential for diversification in investment portfolios, particularly focusing on Chipotle Mexican Grill, Inc. as an alternative to the AI growth narrative [1]. Group 1: Company Overview - Chipotle Mexican Grill, Inc. is being considered for investment due to its value proposition amidst a broader market focus on AI growth stocks [1]. Group 2: Investment Strategy - The investment strategy emphasizes a long-term horizon of 5-10 years, advocating for a balanced portfolio that includes growth, value, and dividend-paying stocks, with a particular inclination towards value investments [1].

Group 1 - The Wendy's Company will release its fourth quarter and full year 2025 results on February 13, 2026, before the market opens [1] - A conference call will be held on the same day at 8:30 a.m. ET, with a webcast available on the Company's Investor Relations website [1] - The conference call can be accessed by telephone for domestic and international callers, with a replay available on the Investor Relations website [1][4] Group 2 - Wendy's operates over 7,000 restaurants worldwide and employs hundreds of thousands of people [2] - The company is known for its Fresh Famous Food, including made-to-order square hamburgers and popular menu items like the Spicy Chicken Sandwich and Frosty dessert [2] - Wendy's supports the Dave Thomas Foundation for Adoption, which aims to increase adoptions of children in North America's foster care system [2]

Core Thesis - Texas Roadhouse, Inc. is viewed as a compelling investment opportunity despite a recent share price decline of nearly 12% over the past six months, as the company continues to demonstrate strong fundamentals in the restaurant industry [2][3][6] Financial Performance - As of January 13th, Texas Roadhouse's share was trading at $189.74, with trailing and forward P/E ratios of 28.97 and 28.41 respectively [1] - Customer traffic has increased by approximately 4%, with same-store sales rising roughly 6% at company-owned locations and about 12% year over year, indicating sustained demand [3] - Average new locations generate over $200,000 per week, contributing to a robust growth pipeline [5] Market Conditions - Investor concerns regarding rising wages, commodity inflation, and a potentially softening consumer have pressured the stock, yet operating data suggests a different reality [3] - Stabilizing beef prices and slowing wage growth to around 3% are seen as positive catalysts for the company [4] Operational Strength - Texas Roadhouse has maintained resilient restaurant-level margins despite cost pressures, reflecting superior store-level management and ongoing efficiency initiatives [4] - The company benefits from high customer loyalty and a simple operational model that does not rely heavily on promotions or marketing [2] Growth Potential - Strong and consistent free cash flow allows Texas Roadhouse to fund expansion, pay dividends, and maintain a conservative balance sheet without increasing debt [5] - Favorable demographic trends and high customer satisfaction, along with approximately 96% institutional ownership, position Texas Roadhouse as an attractive long-term investment [6] Recent Developments - The recent pullback in stock price appears disconnected from the company's operational strength, suggesting potential for meaningful upside as fundamentals reassert themselves [6] - A previous bullish thesis highlighted the company's differentiated operating model and resilient cash flows, with the stock appreciating approximately 10.28% since that coverage [7]

Core Thesis - Dutch Bros Inc. is positioned as a strong player in the U.S. coffee market, appealing particularly to younger consumers through a unique, high-energy experience that contrasts with traditional coffee chains [2][3] Company Overview - Dutch Bros operates and franchises drive-thru coffee shops across the United States, focusing on a vibrant brand identity and employee engagement [2] - The company has achieved approximately 25% year-over-year revenue growth, driven by strong same-store sales and rapid expansion [3] Financial Performance - As of January 13th, Dutch Bros shares were trading at $61.00, with trailing and forward P/E ratios of 124.49 and 68.49 respectively [1] - The stock has risen roughly 30% over the past month, reflecting investor optimism about the company's long-term potential [4] Valuation Insights - Dutch Bros currently trades at around 135x trailing earnings, indicating high market expectations for flawless execution and sustained growth [4] - The forward P/E of approximately 75x suggests continued high growth and margin expansion, but leaves little room for operational missteps or market challenges [4] Growth Potential - The company benefits from consistent revenue growth, attractive margins, and significant opportunities for store expansion in underpenetrated regions [5] - Despite high valuations, the quality of the business and brand momentum make Dutch Bros a company worth monitoring for potential investment opportunities [5] Historical Context - The stock price has appreciated by approximately 79.35% since a previous bullish thesis was published, highlighting the company's successful execution of its growth strategy [6][7]

Core Insights - Noodles & Company plans to close between 30 and 35 restaurants in 2026 to improve financial performance [1] Company Strategy - The decision to close restaurants is part of a broader strategy aimed at enhancing the company's financial health [1] - The closures are expected to streamline operations and focus on more profitable locations [1] Financial Implications - The company anticipates that these closures will lead to improved financial metrics in the coming years [1] - The specific financial targets or metrics that will be impacted by these closures were not detailed in the announcement [1]

Market Overview - The Dow Jones Industrial Average decreased by 0.1%, while the S&P 500 fell by 0.50% and the Nasdaq Composite dropped by 1%, marking its worst performance since mid-December [1] Geopolitical Concerns - Ongoing geopolitical tensions in regions such as Iran, Greenland, and Venezuela, as well as domestic issues in the U.S., are causing trader concerns [1] Supreme Court Expectations - Investors were anticipating a ruling from the Supreme Court regarding tariffs, which did not occur, contributing to market unease [1] Options Activity - There were 1,245 calls and puts with volume-to-open-interest ratios of 1.24 or higher, with notable activity in Shopify, Starbucks, and Pinterest, all of which are considered long-term investment opportunities [2] Shopify Options Analysis - Shopify exhibited four unusually active options with volume-to-open-interest ratios between 1.47 and 4.67, indicating potential trading opportunities [3] Multi-leg Trade Strategies - A Long Strangle trade involving Shopify's January 23 options includes buying a $170 call and a $155 put, anticipating significant stock movement in either direction over the next nine days [4] - The net debit for this trade is $420, representing 2.67% of the share price of $157.61, with a maximum loss occurring if the share price is between $174.20 and $150.80 at expiration, which has a probability of 44.8% [5] Expected Stock Movement - The expected price movement for Shopify over the next nine days is 5.07% or $7.98, with a higher likelihood of profiting from a downside move [6] Long Straddle Strategy - A Long Straddle strategy is also considered, where the strike price for both the call and put is the same, with a net debit of 20.41% of the stock price at $3,215 [7]

Core Viewpoint - Investors in the Retail - Restaurants sector should consider Restaurant Brands (QSR) as a potentially undervalued stock compared to Chipotle Mexican Grill (CMG) [1] Group 1: Zacks Rank and Earnings Outlook - Restaurant Brands has a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while Chipotle Mexican Grill has a Zacks Rank of 3 (Hold) [3] - The improving earnings outlook for QSR makes it a more attractive option for value investors [7] Group 2: Valuation Metrics - QSR has a forward P/E ratio of 17.51, significantly lower than CMG's forward P/E of 33.94 [5] - The PEG ratio for QSR is 2.54, while CMG's PEG ratio is higher at 3.86, indicating QSR may be undervalued relative to its expected EPS growth [5] - QSR's P/B ratio stands at 4.44, compared to CMG's P/B ratio of 16.66, further suggesting QSR's relative undervaluation [6] - Based on these valuation metrics, QSR holds a Value grade of B, while CMG has a Value grade of C [6]

Core Insights - Chipotle's shares fell 38.6% in 2025 due to poor traffic and sales figures, raising concerns about market saturation and future growth potential [1] - The company experienced a significant decline in same-store sales growth, with rates of 0%, 4%, and 0% for the first three quarters of 2025, which is below inflation rates for restaurant input costs [3][4] - Chipotle's operating margin decreased to 16.4% from a previous high of 17%, indicating pressure on profitability due to stagnant same-store sales [4] Financial Performance - Over the last decade, Chipotle achieved cumulative revenue growth of 178%, primarily through new store openings and revenue growth at existing locations [2] - In 2026, Chipotle's share price has begun to recover, increasing by 8.5% year-to-date, but the stock still trades at a price-to-earnings ratio of 36, which is higher than the S&P 500 average of 31 [6] Market Position and Future Outlook - Despite the stock's decline, Chipotle is not considered cheap, and while it plans to grow its store count in North America and explore new markets, concerns remain about weak same-store sales growth [7] - The current weak traffic to Chipotle locations poses a risk to both revenue potential and profit margins, which could adversely affect earnings per share growth [7][8]

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, its sole sponsor, overall coordinators, advisors or members of the underwriting syndicate that: If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company's prospectus registered wi ...