Why Tim Hortons Inc. Smells Tasty

Before you go, we thought you'd like these...
Before you go close icon

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Tim Hortons climbed 1% this morning after KeyBanc upgraded the Canadian coffee giant from hold to buy.

So what: Along with the upgrade, analyst Christopher O'Cull planted a price target of $75 on the stock, representing about 33% worth of upside to yesterday's close. So while contrarians might be a bit turned off by the stock's strength over the past month, O'Cull's call suggests growing sentiment on Wall Street that Tim Hortons' recent improvement is sustainable.


Now what: According to KeyBanc, Tim Hortons' risk/reward trade-off is pretty attractive at this point. "Our upgrade is based on our view that Tim Hortons new CEO Marc Caira has increased the sense of urgency for improving SRS at the Canadian restaurants, which represent about 90% of system sales and 99% of profits, and will elevate the quality of brand management of an already healthy restaurant chain that has significant resources for implementing improvements," said O'Cull. "The Company recently unveiled a five-year plan that focused on growing sales at existing restaurants through food innovation, better menu management, new value strategies, improved service and using technology to enhance the guest experience." More important, with the stock still off about 10% from its 52-week highs and trading at a reasonable forward P/E of 15, there's more room to buy into that bullishness.

More reliable ways to build wealth
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

The article Why Tim Hortons Inc. Smells Tasty originally appeared on Fool.com.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Nature Gets Revenge On Safari Hunter Who Killed Elephants And Lions For Sport Nature Gets Revenge On Safari Hunter Who Killed Elephants And Lions For Sport
Man Suspects His Wife Is Cheating On Him - Then His Daughter Reveals What's Really Going Man Suspects His Wife Is Cheating On Him - Then His Daughter Reveals What's Really Going
Don't Get Too Close To a Newborn Giraffe Unless You Want to Get Kicked in the Nuts Don't Get Too Close To a Newborn Giraffe Unless You Want to Get Kicked in the Nuts