I occasionally will peruse my older columns and find some that make me cringe and wonder what the heck I was thinking, while others make me smile. Writing a stock-based column memorializes what you were thinking at a given point in time and provides you a diary of what went right and what went wrong. It is a great way to learn and hone your investment philosophy; I figure if I can live to about 150, I finally may get it right.
I'd forgotten about a column from this time last year that focused on Dine Brands Global Inc. (DIN) , which was then known as DineEquity. The stock had a bad 2017; indeed, it was one of the worst-performing restaurant stocks that year and had fallen nearly 50% since February 2015. It seemed cheap to me at the time and was definitely out of favor, a combination that can be compelling. The stock is up more than 50% since then, yet still trades at about 11x next year's earnings, making it the cheapest restaurant name in terms of price-to-earnings (P/E) multiple among companies with a market cap in excess of $250 million. Interestingly, despite its run over the past year, Dine Brands still trades at about the same forward P/E ratio, which means earnings have been heading in the right direction.
That column also revealed one of my many flaws as an investor, that being that I don't do growth, because I was wired for value at birth. I've still never owned a FANG stock; I might if one of the FANGs crossed the line to value as eBay (EBAY) did several years ago, but that has not yet occurred, at least not to the extent that I'd need to see in order to nibble.
While DIN has done well since that column ran, the FANG stocks also have been in positive territory, up an average of about 13%, a great return considering that the S&P 500 was down about 6% during the same time frame. Netflix Inc. (NFLX) (up 48%) was the best of the bunch, while Amazon.com Inc. (AMZN) was also in positive territory (up 26%). Alphabet Inc. (GOOGL) (down 5%) about matched the S&P 500, while Facebook Inc. (FB) was down 18%. FB now trades at 20x next year's consensus estimates, historically cheap for the name, but the company appears to be facing some bigger issues.
I did return home from a mission trip to Haiti this time last year with a different perspective on Facebook. While teaching basic business skills to some young entrepreneurs in Haiti, our hemisphere's poorest country, I was surprised to see that most of them had personal Facebook pages and were eager to use Facebook for their prospective businesses as well. Still, the name is not for me, as many times as my brother-in law and his wife remind me that they were in at $20 a share.
So, for once, during one slim time period, value "won" versus the FANG stocks. Perhaps not a fair comparison, one restaurant name versus four growth darlings, but what the heck? That's data mining at its finest.