What’s being hinted at for Chris Mayer’s Focus?

Checking up on a stock Chris Mayer is "watching right now"

By Travis Johnson, Stock Gumshoe, September 27, 2016

I’ve had a bunch of readers asking me to look at the ads for Chris Mayer’s new service, so that’s the plan today.

We don’t usually see ads for newsletters that cite Stock Gumshoe, so that also helped catch my eye when I was browsing ads and deciding which teaser pitch to cover recently — the ad for the new Chris Mayer’s Focus service at Bonner and Partners actually quoted some Gumshoe readers who’ve commented on his work, and quoted a couple of the nice things I’ve mentioned about Chris in the past.

I’ve also been critical of some of Mayer’s ads in the past, of course, and he has certainly chosen his share of stinkers (as have we all). Most of the Agora-plex of newsletters use crazy over-the-top ads sometimes to get people hyped up and convince them to subscribe (Chris Mayer moved from Agora Financial to Bonner & Partners, but Bill Bonner founded Agora and they’re all interrelated)… but I do generally like Mayer’s form of value-focused analysis, probably mostly because it resonates pretty well with my way of thinking, and I have enjoyed his conference presentations when I’ve caught them in person.

And this new ad for Mayer’s service, which would run you a steep $3,000, does hint at a stock that Chris is “watching.” I don’t know if it’s an active recommendation, but I thought folks would be interested in discussing it… so can we get a name for you?

Here are the hints:

“For example, here’s one of the stocks Chris is watching right now.

“It owns two small regional restaurant chains (334 restaurants total).

“These are both strong restaurants with industry-leading sales per venue.

“For the last four years, through 2015, earnings per share have grown 36% annually.

“Long-term, Chris likes the story.

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“He believes this restaurant could expand to at least 800 locations in the coming years… and hand investors a “10-bagger” gain.

“There’s nothing quite like it… But it reminds Chris a lot of Chipotle…”

So who is it? This is Fiesta Restaurant Group (FRGI), which owns the Pollo Tropical and Taco Cabana restaurant chains. There are actually now 336 company-owned restaurants, plus another 40 or so franchised locations, but otherwise the chart provided by the ad as a further “hint” matches FRGI’s past few months perfectly.

This is a company that’s doing some restructuring, and that has had a rough year or so — 2015 was the tail end of a big spurt of growth for them, earnings will likely be substantially lower this year than they were last year, but they are are expected to start growing again next year (say the analysts). So it’s not getting a wild growth valuation anymore either, back when they were finishing up those several years of rapid restaurant growth and earnings growth and posting more than $1.50 in earnings per share a year and a half ago, the stock was peaking in the high $60s with a PE ratio above 40.

Now, with earnings falling and expectations more muted, they’re still growing their restaurant base and likely to grow top line revenue and the PE ratio is about 19. The forward PE, based on expectations of earning $1.44 per share in 2017, is about 17.

Fiesta Restaurant Group was spun out of Carrol’s (TAST) back in 2012, primarily as a way to recognize the value of the growth in these regional chains instead of keeping them hidden inside a company that primarily operates Burger King franchises. The two chains have been around for several decades, but are very focused on specific geographies and it seems like they’ve been having a bit of a challenge, particularly marketing-wise, in building a presence in cities outside of South Florida (for Pollo Tropical) and Texas (Taco Cabana) — and it didn’t help that consumer spending growth in Texas, which is where much of their expansion has been focused in recent years for both brands, has apparently taken a bit of a hit from lower oil prices.

I haven’t done much analysis on this one yet, but there are some things to like — they are setting up Taco Cabana to be spun off as a separate company over the next couple years, and they’ve also been investing in re-imaging both brands with different looks and different restaurant designs that look pretty nice. I’ve never actually been in either restaurant, but Pollo Tropical is clearly where their focus is and they’re hoping to build a national brand and chain for that caribbean-style fast casual eatery.

Will it be the next Chipotle? Well, at their stores in the heart of South Florida, where their brand recognition is best, they do put up per-store numbers that are fairly similar to Chipotle (well, Chipotle during its heyday before the e coli mess) when it comes to revenue per store, so that’s good. And their margins are pretty good, though not as fantastic as Chipotle’s. The question really is whether they can continue to grow their store base and keep company revenues increasing, because the same store sales growth is not there right now. There’s a pretty good basic presentation about the company on their website here, though it’s a few months out of date.

The strategy of building up one media market at a time, to maximize the impact of TV advertising spending, makes sense to me, and the brand has been proven in at least one market — it doesn’t do quite as well outside of South Florida (on a per-store revenue basis) as it does in its core markets, but the stores don’t seem to be terrible elsewhere. I also like that, like Chipotle, they’re focusing on opening company-owned stores — it’s more expensive, and it means you can’t grow quite as quickly as you might otherwise, but it gives you much better control of the brand… and there’s potential for rapidly franchising in a few years, perhaps, once they’ve gotten more established in a few more cities. The company thinks their potential for Pollo Tropical is 1,600 locations (Chipotle and Panera are both around 2,000 at the moment, for comparison), so they’re only about 10% of the way there right now. The balance sheet is quite good, they do have some debt (as you’d expect for a company building out its own stores), but from what I’ve seen in their reports it’s very manageable at this point, and as expansion proceeds they should be able to at least double their debt load without causing any cash flow stress.

I have a hard time evaluating restaurants I haven’t seen, but the media coverage of Pollo Tropical that I’ve seen looks pretty good, and the image of the restaurants is pretty nicely differentiated… and if you can get a good restaurant chain that’s able to replicate its success across the country that can quite obviously turn a tiny company into a very large one, very quickly.

I’m inclined to watch this one, the lack of growth means there may not be any reason to jump in quickly at this valuation unless you’re otherwise seeing a lot that you like, since it’s not really in the “dirt cheap” category and they’ve had a couple disappointing quarters in a row and have had their analyst estimates cut many times this year, but I can see the potential for it to work out well if the brand strengthens outside of Florida… and Pollo Tropical is much more differentiated as a brand and a concept than is Taco Cabana, which looks similar to a lot of fast casual Mexican or Tex-Mex chains, so I like the plan to split the two chains in 2017 or 2018.

That’s all I’ve got for you so far, I’m going to keep an eye on FRGI but I’m not in a rush to jump in… if you’ve tried either of these restaurants, or have any thoughts about Fiesta Restaurant Group, feel free to share with a comment below.


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spica777
Irregular
👍12
spica777

The other five stocks being “watched” (aka teased) by Chris Mayer as a come-on to drop 3K on his new newsletter are FOGO, GRBK, CLNY, NOMD, and SCU.

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Fabian
Guest
Fabian

These Agora/Bonner guys are cross breeding like a bunch of meth cooking hillbillies. Mayer was selling his sauce for $ 49 at Agora and now sells the same for $ 3000 at Bonner. I was not enthused at $ 49 and will certainly not pay $ 3000 for a Florida Pizza chain. In the same vein, the good Dr. Eifrig has a dividend letter that is good but nothing better than what you can find on Seeking Alpha if you scan well. The price was $ 100, correct. Now the price is $ 1,500 for new arrivals. Crazy. I give… Read more »

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SageNot
Guest
SageNot

Yep, Bonner & Porter must think that their old subscribers are dumb. Porter tries to convince his followers that he doesn’t care, how’s that for a “dumb as they come” liar? $49./yr. reports just aren’t worth $1,000’s+, & they will find this t/b true soon ’nuff!

curiousjoe
Member
👍27
curiousjoe

Here, here! I presume the $5M show of confidence in Mayer’s picks by Bonner & Family justifies the inflated price. But then, $5M is probably mere change jangling in the back of pocket of Bonner’s Levi’s. Also, at $3000 per pop, it would take a mere 1666.67 muppets out of an audience of 23,000 to bring in $5M.

brippel
Member
👍6
brippel

I attended the Focus presentation as I used to get $49/year 100-1 Bagger newsletter. The sound died frequently in Focus presentation. I like his research but not for $3000/year. You get 250 companies on watchlist. They are not recommendations yet.You get the second year free. 100-1 Bagger newsletter folded. I was given Penny Stock Fortunes. This also folded. I am getting True Alpha. I get Lifetime Incomes newsletter and I like this one. The 6 stocks on watchlist are: Fiesta Restaurant Group (I have eaten at both Taco Cabana (mexican fast food) and Polo Tropical in Pearland, TX. Polo has… Read more »

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ptrowe47
Irregular
👍1

I participated in Chris Mayer’s conference call about his new Focus newsletter. My thoughts were the same as you kind of allude to. To pay $3,000 to get a recommendation like the Fiesta Restaurant Group did not seem like a good investment.

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Honolulu Aunty
Guest

I bit the bullet a few months ago and joined (lifetime) Chris Mayer’s stock picking subscription because of Bill Bonner. Like you, I believe in his reasonings for choosing stocks, and I must concede that others are far better than me at finding good stocks, so I paid. However, it is confusing at the different pitches coming from Bill Bonner, and now Casey Research, Palm Beach Letter, etc. about Chris Mayer’s services. Does my initial subscription that already costed me a few thousand dollars have these new “pitches” included in upcoming recommendations? Or, are there different picks from Chris for… Read more »

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brippel
Member
👍6
brippel

Chris Mayer said in the Focus webinar that the Bonner & Partners newsletter covered large cap stocks. Focus newsletter covers small cap stocks.

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Honolulu Aunty
Guest

Mahalo for that distinction. Actually, I am more of a small cap stock kind of person but maybe it is time for me to grow into large cap stocks. I don’t want to purchase another expensive investment subscription.
Mahalo again!

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5971
Guest
Guest
Guest

There aren’t individual stocks for each ad you’re seeing. They all seem to have an agreement “if you advertise my webinar to your email list, I’ll reciprocate and advertise your webinar to my subscribers.” They all send you to the one and only webinar so any gems being promoted by that person or service will be the same no matter where you heard about it. If you are already a subscriber, just sign in and it’ll be there, usually a day or so in advance or it may have been there for months already.

Edward K. Motley
Guest
Edward K. Motley

When I visit my friend in Dallas each year, Taco Cabana is a must-visit for us! It is a good restaurant: reasonably priced, above-average food. It fits that “fast casual” line drawn between Taco Mayo fast food and On The Border casual dining (and yes, Chipotle popularized “fast casual”). While there are certainly valid comparisons to Chipotle, I think the biggest success of Chipotle itself was the lack of expectations. So getting into this stock with such lofty expectations might lead to more disappointments than fiestas. (Come to think of it, many people actively looking for “the next Chipotle” might… Read more »

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Richard gilbert
Guest
Richard gilbert

I have eaten at Pollo Tropical many times. WHether influenced by the Latin Culture or just poor management, the operations of the restaurant has always been under par. A long wait, no recognition, little thank you.. It is very obvious and I even called their VP of operations once and discussed the poor operations. I last visited approx 3 months ago with no improvement.

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ginridge
Member
👍13
ginridge

You have eaten there many times, yet you consider it a sub-par restaurant?

Carbon Bigfoot
Guest
Carbon Bigfoot

Didn’t Einstein define insanity as repeating the same process anticipating a different outcome? Just sayin’

Richard gilbert
Guest
Richard gilbert

Pollo Tropical Must improve their store operations.

jwhallin
Member
👍68

Very pricey service. I declined the initial $2500 “get in before midnight” hustle (Thompson Clark, the moderator, was smooth, but overly persistent throughout the 2 hour pitch + Q&A). Mayer is one guy I’d go to for advice, but not for $3000 for watchlist candidates. Many will likely never get the “green light” or buy signal. CLNY is the only stock on the current watchlist I’d consider buying today, or anytime in the near future. I put the $3K in CLNY, which has been on my watchlist.

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fxcruiser
Irregular
👍16

Chiming in ’bout Pollo. Recently opened one here in Southlake, TX. Folks here will buy anything if it doesn’t involve anymore effort than opening their wallet. Place is never busy; even at lunch. Tried twice, horrible “service”. Help always appears dazed and confused; nary a one of them speaks comprehensible English! Invest here….unhhh, NO!

DOUG
Member
👍5
DOUG

Chris Mayer is my fav; solid recommendations, without the hype of his peers. Loved his service at 49/yr…not worth 3k/yr. Travis, thank you for this post!

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ocelot
Member
👍6
ocelot

I subscribed to Mayer’s $49 service which morphed into Penny Stock Fortunes which has morphed into something else. I will not be renewing any Agora subscriptions. I lost vast amounts of money following these guys. Love how they give sell recs long after the horse has left the barn.

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DJT
Guest
DJT

All I can say is lol at them citing Stock Gumshoe….hahhahha. I get emails from David Stockman. He has a great website but looks like is he is going to terminate it and go with Agora.

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Steve
Guest
Steve

Bonner holds a yearly conference in FL for entrepreneurs, I think. One of my relatives attended and heard him say not to believe anything in his newsletters. LOL.

arrowstone
Guest
arrowstone

Just want to be clear that the Fiesta and the other 5 stocks teased on the “watch list” are simply that, stocks to watch. Chris gave them out free of charge for watching his webinar. Paid subscribers were given other stocks, of which only one was an out and out “buy”. Thanks for covering Focus, Travis, as I was wondering what your perspective was. Especially as you were quoted.

SantafeSteve
Guest
SantafeSteve

I think this crazy high pricing and attempts to sell lifetime subscriptions to things where the analysts up and leave is typical of scam artists.

How many Cubans are there outside of Florida?

johncolts54
Member
👍387

If someone can afford the 3K for the service and get the return to make it up, more power to them. I stumbled on this one and watched it before i joined Gumshoe. I like the advice and interaction from other people and so far it has bee great. I do not have that kinda of money to pay for some of the stocks that the other people tout, 100 to 400$ a share. I am just trying to maybe hit it on some low price ones. There has been a few recently. I applaud Travis and the site and… Read more »

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gumjax
Member
👍30
gumjax

After subscribing to several of Agora, Bonner,Casey & Palm Beach pubs over last 5 years or so (never too much money), I have come to the conclusion that they are all high-level near scam artists of one variety or another. They all now seem to be in bed together even if they say they are not. I don’t subscribe to any of them anymore, but I still get some of them for free. Can’t figure that out, except I think they want to keep me in the loop in the hopes that they can sell me something else. The only… Read more »

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a1drh2001
Irregular
👍3
a1drh2001

Agora, Bill Bonner, Money Map and others are all linked in together and they spend more time trying to sell each other’s newsletters and numerous stock picking schemes. Each scheme for picking stocks is touted as the best way to pick stocks and always is a come on to sell a newsletter. If they spent as much time researching stocks as they do trying to sell newsletters and stock picking schemes they might come up with a few winners or not. If one could invest in their newsletter operations it might be more profitable than their stock picks.

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snoopycat
Member
👍32

I have subscribed to Agora for several years. I got a good deal on a lifetime subscription. Now Cris Meyer is gone along with his columns. I fear that I will have a life membership in no columns in time.

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wneils
Irregular
👍158
wneils

He only one I ever tried to do! I really liked a lot Of his recos. Where did he go?!

Jim V
Guest

You could be right that he’s teasing FRGI — does anyone know for sure ? I researched all small restaurant chains & I eliminated FRGI because Mayer says he’s looking for Insider ownership of 10% or more. FRGI only has 2% Insider ownership. RAVE was the only other possibility that I found. It has 30% Insider ownership. And it has 2 separate pizza chain restaurants, with around 340 total restuarants & an aggressive plan to double that number. They’re also losing money rapidly, so could go bankrupt.

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acloner
Member
👍0

His actual recommendation is Del Frisco’s (DFRG). I am not sure about Fiesta.

Ray Gene
Member
👍3
Ray Gene

I have been in the market off and on since 1955. Gum Shoe is the best dollar for dollar results value I have experienced.!!
Gino Ray San Diego, CA

SoGiAm
Member
👍11367

Welcome to stockgumshoe.com 4xray1597. 🙂
Your concise post speaks volumes. Best2You ~ Ben

wealthynow
Irregular
👍9

I received an email from Stansberry about the Chris Mayer Focus Webinar. (I have the Stansberry lifetime Flex alliance) and they send me e-mails for other services. I watched the Chris Mayer Focus yesterday and they offered a bonus of $2,500 for 2 years if you sign up by midnight. They also had a bonus of 1. Access to Chris Mayer’s privately recorded “100X” Presentation 2. Chris Mayer’s “The Coming Collapse of One of America’s Safest Investments” Presentation. 3. Plus: a 30-Day 100% Money-Back Guarantee 4. His newest book, 100-Baggers: Stocks That Return 100-to-1 and How to Find Them, and… Read more »

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lsfrancis
Member
👍11
lsfrancis

We have the Bonner & Partners, etc. not impressed. Lifetime … maybe someday it will pan out !! also have Stansberry, Casey Research Lifetime, Palm Beach … they now all seem to be under the same “umbrella” and emails arrive … all the same info “3/4 times over !!!

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Janis
Guest
Janis

I joined one of Mayers Bonner groups last year when it was 3000 for lfetime and got some stock reco that have been among the best in my portfolio. But i left b4 the 90 days because they mixed up my account with my sister’s Stansberry account and I got tired of calling Customer Service. Bonner, Casey, Stansberry all sem to be connected thru on incompetent Service center.

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