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Four Reasons Sonic Is Cooking


Try this alternative to Burger King and McDonald's.

I ate a little too much, drank a little too much, and slept in a little too much over the long weekend. And to tell you the truth, I'm looking forward to doing the same thing next weekend.

Asian stocks were a bit of a mixed bag overnight. The Hang Seng was off 0.17%, but the Nikkei finished up 1.33%. European stocks, however, were in positive territory earlier this morning. And here in the US, we're currently trading higher.

This fine Monday morning I'm focused on some companies that are due out with earnings in early January.

The fast-food chain is due out with its first-quarter numbers on January 5, per CNBC. The Street is currently at $0.14.

My thoughts:

1. This company is coming off two consecutive beats per the data I'm seeing and I have a hunch it will come in north of expectations once again. I like the business and I think it's a great alternative to Burger King (BKC) or McDonald's (MCD). From personal experience, young kids like the concept too, which could be important in the company's longer-term growth.

2. At about 13.6 times this year's estimate, I feel there's some room to still run here. I think $12 or $13 would be a pretty reasonable price for the shares right now based upon near-term earnings expectations.

This insider data catches my eye and it's a sign the company could still cook.

4. Of course, for the stock to really gain some serious ground, I believe it will take several more years of performance and consistency on the earnings front.

Delta (DAL)/Continental Airlines (CAL)/UAL Corporation (UAUA):
I don't think the attempted terrorist attack will have a big adverse impact on the group in today's session.

That said, there are some reasons I won't be bellying up to the airlines.

1. I still think Americans are going to be reluctant to drop big coin on vacations that include air travel, especially since the dollar is in the tank.

2. I don't see any big catalysts, like a big drop in the price of fuel or a huge drop in competitive forces on the horizon.

If I were betting on future air travel, I'd rather scope out Boeing (BA) or maybe BE Aerospace (BEAV).
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No positions in stocks mentioned.

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