# THI - Tim Hortons



## philthygeezer (Aug 7, 2011)

What do you think of this stock as a long term money maker? Is this the MCD of Canada?


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## Addy (Mar 12, 2010)

I bought it for mid-term. I plan to hold it for a year or two then sell it if it's worthwhile at the time.


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## kcowan (Jul 1, 2010)

It is one of 2 retail holdings, the stable one. The other is Lululemon!


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## peterk (May 16, 2010)

philthygeezer said:


> Is this the MCD of Canada?


McDonald's is the McDonald's of Canada... Tim hortons donuts have been downhill for years. And their breakfast offerings suck compared to McDonald's. McDonald's coffee is a million times better than it used to be too. All MCD has to do is start serving donuts and Tim's is finished. The only reason the place is still running is because it has convenient ubiquitous locations and a geriatric fan club. Their food and beverages really do suck compared to competitors.


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## Eder (Feb 16, 2011)

I don't really like Tim Horton's either but I go to them from Victoria to Halifax to one of the few USA locations left in Maine. Invariably they are jam packed,line up to get an order in,15 minute waits in the drive thru's.
I dont see this at 2nd Cup or Starbucks or MCD.

I think they have a winner!


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## Jungle (Feb 17, 2010)

Not everyone goes to McDonalds just for coffee. All the Tim HOrton's I've seen always have long line ups in the mornings. Some people at work buy coffee there like twice a day.. multiply that by 5 days a week.. I can see how they make revenue but growth? They are expanding in the US (or trying to) but not sure how that is going. Competing with Duncan Donuts and Starbucks can not be easy. 

I've read many articles saying the price of coffee beans is going up (and it has) because of weather challenges but TH raises the price of their coffee every year. Now that they are giving a dividend, you will most likely see increases every year in their prices. 

Personally I hate their coffee and it takes like crap. Also I am too cheap to buy coffee. I consider it a big money waster but the majority of the population is horrible with money so for this reason TH can capitalize on this. 

PS:

We brew Duncan Donuts coffee at home and we love it!


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## Betzy (Feb 7, 2011)

i dont frequent TH very much but it's hard to argue with there model. I know for fact that in one northern Ontario town 7 locations strong, the sixth location was paid for in six months!! I will be investing in them soon, just waiting for the down turn overall first


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## Addy (Mar 12, 2010)

I rarely eat at Tim Hortons and never at McDonalds.... I equate McDonalds with obesity, diabetes and heart attacks. I tend to invest where I spend my money so I have some stock in THI but not a huge amount.


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## Banalanal (Mar 28, 2011)

There is no argument that THI is here to stay in Canada and it did not grow to its size and profitability without being adored by so many. THI is the most popular restaurant in Canada; more than MCD. Who cares if you like their food, the masses have spoken and in an industry with so little competitive advantages their success is amazing. I heard on the news today there is a successful THI in Dubai.

That dividend will grow. At 12.7 p/e it seems attractive. I just wonder how they will fare expanding internationally when there is so little competitive advantages and brand loyalty has to play a negative role when trying to establish market presence in new territories.


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## donald (Apr 18, 2011)

They havent done that great when expanding into the northern states of the us,this is just my opinion but for a stand alone coffee business i think starbucks will do better,just seems like they will have huge obstacles in emerging markets,ive wondered why they havent been growing in the us(maybe they are and i dont know it)they just seem like a canadian chain,kinda like a canadian tire which is loved here too but would fail miserably expanding elsewhere.I just cant picture tim hortons dominating elsewhere than canada,even thou they have a good product.


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## Cal (Jun 17, 2009)

Great summarization on the changed DRIP/OCP plan:

http://www.dripprimer.ca/timhortons


Expansion into Dubai:

http://business.financialpost.com/2011/09/20/tim-hortons-mobbed-by-crowds-in-dubai/


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## Banalanal (Mar 28, 2011)

You'd think at that 12.8 p/e, a big discount to its average, THI needs only moderate international expansion success for this stock to be a great long term buy and hold for its dividend growth potential not to mention some capital appreciation.


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## Cal (Jun 17, 2009)

I question how much THI is committed to increasing their divi in comparison to other companies...


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## Jungle (Feb 17, 2010)

The problem with Starbucks right now is the P/E is at 25X.. not so attractive. 
However what is attractive are people willing to pay (every day) a "premium" price for coffee and beverages. 

On the rare occasion I do buy coffee (most likely from a free money source) I go to Starbucks-not Tim Hortons.


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## donald (Apr 18, 2011)

Starbucks the "brick and motar" was more what i was meaning than current stock prices.
Even if its overpriced,i would like my chances better holding starbucks than tim hortons in a portfolio longterm.

Ive noticed tims seems to be going abit downhill in the last few years,i still like the coffee but there is a difference.Guess the buy and hold doesnt work though now lol...or does it?who knows...being in the markets is like being on Lsd anyways.


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## spirit (May 9, 2009)

*Not impressed with Tim's*

A few years ago my husband and I would often stop into Tim's for a light lunch while on the road. And if I wanted a quick coffee it would be Tim's. I had a gift card to use up and so we stopped into a restaurant on the way home from Banff this week. My husband had the chili which was way too salty. I had the soup combo which was just reconstituted vegetables. He took the donut for a snack on the road but an hour later threw it away because the napkin it was in was so grease stained he was too disgusted to eat it. 
I heard that Tims was changing the way it was doing things but if this is their way I will not support them. There are so many better healthier alternatives. I would not invest in a company where I did not like the product. JMHO


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## m3s (Apr 3, 2010)

spirit said:


> I would not invest in a company where I did not like the product. JMHO


I tend to invest in companies I dislike as a consumer and rarely do I like ones that are also good investments. What is it now nearly $2 for a horrible coffee? People lining up out the door and idling their cars for 30 mins for a coffee? Rip offs = good investment imo

I used to follow the crowd until I found real coffee for a fraction of the cost. I think we all got hooked when it was actually good before Ron Joyce sold out. Now it's mostly religious brand power


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## Sampson (Apr 3, 2009)

I wonder how many people look at stocks based on their personal 'observations'.

So what if people line up for 30 min. What is the margin on each transaction? how much is kept in the pockets of the franchise holder? etc. I would guess Tim's makes a lot of its money on licensing and franchise fee's - and they are very profitable for the frachisee. I've never done the financial analysis, but I certainly wouldn't want to invest based on my observations at the local store.

It has also grown into a weird beast. What are their future endeavors? US market? Hasn't worked out very well. Canadian retailers always say that it takes many years to crack the US market, but the truth is that most just try and fail.

Starbucks may be trading at a premium, but they have redeveloped and retooled expansion plans dramatically and have very focused efforts now. 2 years ago, the stock dropped to under $15, triggered by the recession, but mainly because of untargeted over expansion. Management really had to rethink - Tim's has to do the same.


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## donald (Apr 18, 2011)

Ive read a few articles on howard schultz,he is a dynamic leader,starbucks has prob the best real estate side of things,I know leadership isnt everything but schultz has already proven he is a genius,he is up there with jobs imo,look how far he has took his business.

It seems like starbucks has it figured out,Tim hortons and starbucks are different thou,tims is more in line with dunkin donuts as far as clients,products and pricing.That cross over is always hard for canadian companies,doesnt make a whole lot of sense,one thing is for sure starbucks has been well recieved since expanding in canada.


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## m3s (Apr 3, 2010)

Sampson said:


> I wonder how many people look at stocks based on their personal 'observations'.
> 
> So what if people line up for 30 min. What is the margin on each transaction? how much is kept in the pockets of the franchise holder? etc. I would guess Tim's makes a lot of its money on licensing and franchise fee's - and they are very profitable for the frachisee. I've never done the financial analysis, but I certainly wouldn't want to invest based on my observations at the local store.


Of course not, it all comes down to the price of the stock. All I was saying is that I tend to invest in things I don't use as a consumer. Tim's wouldn't sell as many franchises if people weren't lining up for 30 mins to pay a 1000% markup for coffee. How would there be a Tim's on every corner otherwise?

Many of the changes to Tim's since Ron Joyce left were in favour of the business not the consumer. People still line up and pay more for thawed food as they did the fresh. I don't see Cdns "waking up" to good coffee anytime soon


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## Cal (Jun 17, 2009)

http://www.theglobeandmail.com/glob...hortons-breaks-the-50-barrier/article2181810/


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## donald (Apr 18, 2011)

I noticed tim's is rolling out new cup sizes(each one is replacing the other)the new xtra lg looks huge!I know they did a price hike not that long ago and now this tactic.This will most likely be successful imo,im guessing 50% of people are going to upgrade there purchase(without thinking)I think mangement nailed this from a revenue view....anybody like this move?Ive got tim's on my watchlist and this excites me further........anybody have any thoughts...anybody looking at the stock rightnow?


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## Banalanal (Mar 28, 2011)

I'm very interested in THI as there are just so few Canadian companies I am enticed to own. I find it hard to put a price on the company as its financials don't lend themselves to DCF analysis very well. It would be nice if someone could give a breakdown of their entry point price. I would buy the stock on bad news on if the market itself tanked from more macro economic issues. But it would be nice to have a more specific price for THI on my watch list.


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## Mall Guy (Sep 14, 2011)

To compete in the US market, it's all about how big a cup you can offer for $.99 (coffee, Big Gulp, whatever). Tim's needed the extra large in the US — 24 oz to compete with 7/Eleven, Duncan etc., and moved to standardize in Canada. It will be interesting to see what their new premium offerings will do to the drive-thru lines.

Does anyone remember when Starbuck's renamed everthing "Tall (12 oz), Grande (16), Venti (24)"

Also, they have long ago stopped being a doughnut shop . . . main stream fast food restaurant (QSR) . . . its just the longest re-branding exercise ever undertaken, as everyone keeps calling them a donut shop. They even stopped making the donuts fresh in their "bakery cafe's"! 

McDs is fighting back (coffee wars! soft seating and fireplaces), Subway is still coming on strong, let allow all the others. . . sadly the lunch counter at Zellers lost the fight!


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## Cal (Jun 17, 2009)

Mall guy...when you posted ' to compete in the US'....made me think.

Will THI ever be able to compete/compare market share-wise with a MCD?

I don't hold any THI, and have considered picking some up. (although I am personally a little offended by their drip program) As I do think that their market sahre should expand and grow, but by how much, I do think THI has certain limitations.....

Inside an RRSP hands down I would pick MCD over THI...


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## Toronto.gal (Jan 8, 2010)

Cal said:


> 1. I am personally a little offended by their drip program.
> 2. Inside an RRSP hands down I would pick MCD over THI...


1. MFC had a similar charge, but they removed it, why not THI?

The reason given for it in the first place [by MFC], had been that costs associated with administering such a plan, would in the end, be paid/subsidized by even those that opted out of the DRIP plan & that their research had showed that only 30% would use DRIP/OCP plans. But LOL, the fee for Canadians = $15 per OCP + other fees for reinvesting dividends while for US investors, the fee = $5 per OCP.  

I gather THI's research [if any], showed lower DRIP enrollment than MFC's did, so they are sticking to their fees. 

http://www.dripprimer.ca/timhortons

2. No doubt & one of my top 10 investments!


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## Mall Guy (Sep 14, 2011)

Cal said:


> Mall guy...when you posted ' to compete in the US'....made me think.
> 
> Will THI ever be able to compete/compare market share-wise with a MCD?


That's a tough one, but here are some random thoughts.

They need US expansion to keep growing, as they are running out of new store opportunities in Canada (although they are looking at further growth in Western Canada and Quebec). They are also trying to leverage same store growth with new product introductions and co-branding (Cold Stone). You have to admit, they have done an excellent job of morphing from a "donut shop" to a broader based sandwich/bakery product restaurant. Average store sales over the last 20 years have more than doubled (maybe even tripled) - read average is around $2.0M, very close to McDs I believe. So yes, they can compete in the domestic North American market, and have proven it in Canada for sure.

I remember how concerned they were about the move to no smoking in public places a while back (anyone remember the glassed in smoking area with a separate HVAC system?). Turns out, this was one of the best things that happened to them, as it suddenly opened them up to people who would never set foot in side because of second hand smoke.

The co-brand with Cold Stone (1400 stores, mostly in the US) may actually be more beneficial to brand recognition in the U.S., where Cold Stone is far better known then Tim's. They are now concentrating growth (560 stores +/-) in core markets in the U.S. in terms of new stores, advertising and as importantly figuring out product mix (remember the US is home to Krispy Kreme). It will be years of slugging before they can duplicate the success in Canada (were they have huge brand loyalty). In the US market they're just one more player in a very crowded space, where everyone is competing for the same consumer dollar.

A few years back McDs was on the ropes, with flat same store sales and a stock price to match . . . in part do to aggressive expansion by Subway (US and Canada) and Tims (Canada) at a time when the public wanted fresh alternatives, and bargain "meal deals". They weren't looking in the rearview mirror at the competitor's eating their lunch 

McD is undertaking a huge program to re-brand their restaurants, image and product offering. Coffee is a huge part of this, and it seems that they got it right this time (McDs have struggled with the reputation of their coffee forever). They are also international in scope, in every major country around the world. Interest however, KFC enjoys first mover advantage, and has out position McDs in China.

So, although Tim's enjoys huge brand awareness in Canada, and is growing it in the states, I don't think anyone in Australia, Japan or China is going too get to exited about Tim's arrival in those countries.


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## Banalanal (Mar 28, 2011)

Anybody have an entry price on THI and their reasoning behind it?


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## doctrine (Sep 30, 2011)

They earned $1.71/share in the first 3 quarters of 2011. That puts them at a P/E of 21.4. Given that they are a slow growth company, I would put an entry point at a minimum P/E of 15 and that means an entry price of $34.20. The last time they were at that price was July of 2010 so by my books they've been unattractive for the last 18 months.


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## cdnpennystocks (Oct 27, 2011)

If you think the markets are safe, right now would be a good time to buy THI as they have a nice uptrend going. However if you are unsure about the direction of the market I would stay away, or maybe just buy 25% of your position and then wait for a better entry point. 

Personally I think there are too many unknowns in the markets in general to be picking stocks right now.


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## Jungle (Feb 17, 2010)

I really like doctrines answer as I tend to use P/E when trying to determine value and growth. However this does not determine if the company can grow at that expected rate either, so one must do their own research.

They have mentioned they are opening some 250 stores in the US a couple months back. Maybe that was factored into the stock price when it went from $40 to $50 share.


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## Jungle (Feb 17, 2010)

If Starbucks or Mcdonalds was not so dam expensive they might be better companies for growth, market share and brand dominance.


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## doctrine (Sep 30, 2011)

A P/E of 15 may be a little low given the current environment. I guess if I had an urge to start a position in THI, I'd like to see it below $45 and certainly below $40. A couple quarters of 5-10% growth year over year and maybe some good economic news may discourage some investors looking for safety. And the yield is just so low because of the high P/E and relatively low payout.


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## Cal (Jun 17, 2009)

http://seekingalpha.com/article/349331-tim-hortons-near-religious-following-protects-dividends


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## Montrealer (Sep 13, 2010)

*Anyone buying Tim Hortons (THI)?*

Anyone buying Tim Hortons (THI)? Up almost 4% today and I am interested because they are opening more and more locations in Quebec.

Anyone?


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## Jungle (Feb 17, 2010)

Not at this price. Needs to come down.


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## KaeJS (Sep 28, 2010)

Jungle said:


> Not at this price. Needs to come down.


Way down.


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## ddkay (Nov 20, 2010)

Hate their food, their coffee isn't very good, and they don't even accept VISA. I couldn't stand behind a name like this.


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## gibor365 (Apr 1, 2011)

ddkay said:


> Hate their food, their coffee isn't very good, and they don't even accept VISA. I couldn't stand behind a name like this.


Coffee in Canada generally sux as well as beer and food  

THI has really great expansion in States... has a good potential, but yes , when I look at at it's always too expensive (I mean stock)


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## donald (Apr 18, 2011)

I'm sure there are alot of globe readers here but just in case-Good article today on timmies(they did hike the div up quite abit)


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## groceryalerts (May 5, 2009)

I owned this stock for over a year and sold around $45 (I thought it was expensive at that price).


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## dave2012 (Feb 17, 2012)

I've owned THI since Oct 2006 when I bought it in around $19.20. It's done us well. Pretty pricey lately, so won't be buying anymore.

I too hate their coffee and everything else for that matter.

McD's new coffee is far superior I say. MUCH more likely to resort to McD then Tim's for my morning coffee these days.

More likely to buy MCD than THI and better dividend.


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## Soils4Peace (Mar 14, 2010)

I hold BPF.UN and CTC.A in the consumer sectors. I like this sector but can't hold them all


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## Cal (Jun 17, 2009)

http://cnews.canoe.ca/CNEWS/Canada/2012/02/29/19439616.html


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## Cal (Jun 17, 2009)

Great article by John Heinzl comparing the stock of MCD and THI:

http://www.theglobeandmail.com/glob...ight-mcdonalds-vs-tim-hortons/article2447041/


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## Dopplegangerr (Sep 3, 2011)

Cal very good article. I wanted to add one to my portfolio and now it has reconfirmed MCD is the way to go. Cheers


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## Sampson (Apr 3, 2009)

The comparison isn't even close.

These are consumer stocks after all, dictated by consumer spending habits.

When was the last time you heard a kid plead to go to Tim Hortons. Meanwhile, my 18 month old son has had McDs fries once in his life and he is already hooked. Completely different companies.


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## Dopplegangerr (Sep 3, 2011)

I loved the stuff at Timmys when I was a child


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## doctrine (Sep 30, 2011)

Same here. Timbits are awesome.


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## Jungle (Feb 17, 2010)

Read that article too. I have to say Mcdonalds has come a long way with their food and upgraded resturants. My wife LOVES the smoothies - they are 100% fruit . I admit they are pretty darn good! 

I want to buy MCD (the stock that is!)


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## Sampson (Apr 3, 2009)

Fine. You guys don't like the "kids" as target customers comparison.

How large of a growth market and opportunity does McDonald's have compared the Tim's. THI can't make in roads into the US, and McD can't make significant in roads in China, but at least they are still growing there.

If THI can ever conquer the US, or at least North Eastern US, then I think there is huge potential for that company, but they have been trying for a long time and not making much progress.


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## Dopplegangerr (Sep 3, 2011)

THI are popping up everywhere in the UAE. Very strange to see


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## Hugo Reyes (Jun 1, 2012)

13% profit rise and the stock falls? Oh well, I picked up some more.


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## doctrine (Sep 30, 2011)

At $50.80 and $0.69 in earnings, they're trading at a 18.4 times P/E. So yes it fell - but this is the first time in a while the P/E has dropped below 20, and the stock buybacks are a big reason why - 10 million less shares this year than last. 

US same store growth up 5% - US stores are profitable and growing faster than the Cdn stores. That's all good news and maybe enough to get me to jump in.


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