Flash back to 2009, George Clooney made Up in the Air and was not married to Amal yet. The Pittsburgh Steelers won the Super Bowl, the Penguins went on to win the Stanley Cup, Barack Obama was sworn in as our 44th president, and most likely, you went to Cracker Barrel to eat at some point during the year.
The stock market was coming off a horrific decline known as the mortgage crisis of 2008, where we saw Lehman Bros. close and nearly every equity portfolio took a hit. Most American retail accounts took a hit, and more investors exited the stock market than ever before. In fact, many have yet to return and those that stayed likely did not add any positions. Few readjusted based on an economy that was changing from the widely held investments like Cisco (CSCO) and IBM (IBM) to the mobile millennial-driven world of Twitter (TWTR) and Netflix (NFLX) . If you were a manager, you were already in Facebook (FB) and Linkedin (LNKD) . But most investors needed a consumer stock in their portfolio, and if you didn’t buy Sam Adams (SAM) , you probably bought Cracker Barrel (CBRL) at $15 knowing it was undervalued.
Today, Cracker Barrel reported earnings for Q1 2015 and is trading $145 per share. They beat analyst expectations and may trade $155 today to retest new highs, or they may trade $145 for most of today. But the point I’m making is, from the bottom of the move in January 2009, Cracker Barrel is up nine times since the selloff and shares are up 100% in the last two years. Sure, other stocks have over performed Cracker Barrel, but few consumer stocks have been as consistent as Cracker Barrel in ringing the cash register and operating their business. Simply put, CEO Sandra Brophy did one of the best jobs at running her company of any CEO in any sector. She should be running for president; not Carly Fiorina.
Cracker Barrel just reported that they blew numbers away, and said it will pay a special dividend of $3 a share, this means CEO Brophy will have a nice payday and so will the money managers who stayed the course. Keep in mind, this was not easy because 2015 has been dead money for many managers who will be kicking themselves for kicking Cracker Barrel to the curb. Also, its new quarterly dividend of $1.10 a share, up from the $1, and the $3 special dividend will be paid on Aug. 5 to shareholders of record as of July 17. .
For the quarter ended May 1, net earnings rose to $35.3 million, or $1.47 a share, from $28.7 million, or $1.20 a share, in the same period a year ago, meaning that more of you are dining out at this icon of a breakfast spot, dotting every highway and byway, and today, I can say that 2009 is finally behind us and all is right in the world. Head down to a Cracker Barrel and order a Country Dinner plate, every good portfolio manager knows this is your intention.
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