Wendy’s – Bought 3,000 Shares
Wendy’s is experiencing a strong negative market price adjustment. This is driven by a lack of true growth and financial turmoil. In November of 2024, a mere nine months ago, Wendy’s stock price was just above $20 per share. During this past week, the market price dropped to less than $10 per share. After conducting a thorough research of the current intrinsic value and setting a buy price, the facilitator for the Value Investment Fund has determined that Wendy’s is a sound buy.
Today, the Value Investment Fund purchased 3,000 shares of Wendy’s at $10.00 each. In addition, the Fund paid a 25-cent per share transaction fee. The total investment is $30,750. Furthermore, the facilitator has determined that it is in the best interest of the Fund to incrementally purchase another 2,000 shares per 50-cent market price reduction.
In summary, the following are the respective value points for Wendy’s:
- Book Value $0.67/Share
- Intrinsic Value $12.00/Share
- Buy Point $10.00/Share
- Sell Point $20.00/Share
- Expected Hold Period 4 Years
- Anticipated Dividends $3.25/Share Minimum
Reviewing the financial situation with Wendy’s, the facilitator has determined that this investment is a long-term hold as it will take about eight solid consecutive quarterly reports with positive results to reassure others that indeed value exists with this investment. The anticipated selling points are as follows:
. Sell Point Gain Expected Dividends Total Return Annualized Return
One Year $14.00 $4.00 $0.56 $4.56 45%
Two Years $16.00 $6.00 $1.70 $7.70 32%
Three Years $18.00 $8.00 $2.70 $10.70 27%
Four Years $20.00 $10.00 $3.25 $13.25 23%
Three risk reduction elements make buying Wendy’s now a solid investment:
- Current dividend yield is greater than 5.5%;
- More than 15 years in a row of recorded net profits;
- The number of shares outstanding is almost half of the 370 million shares in the market back in 2013.
As the market price drops towards $8 per share, there will be more and more interest by retirement plans and other large investors to buy a dividend-driven investment as the dividend yield will exceed 6%. At $7 per share, the dividend yield will exceed 8%. This alone assures an investor of a reasonable floor price for Wendy’s. Again, the company is still producing good profits, not great profits. It does have its issues, such as a high liabilities ratio and a lack of growth from the property leasing segment of revenue. But overall, Wendy’s is a solid buy at this price. Act on Knowledge.