The Second Cup Ltd. (TSX.SCU)

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Taggart
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The Second Cup Ltd. (TSX.SCU)

Post by Taggart »

Not invested in Second Cup but it's future looks kind of dismal to say the least. Only heard this morning on the radio that both the CEO and CFO are gone. Aside from a couple of independents we visit, my wife and I enjoy Second Cup as well. Just goes to show it's not always a good idea to invest in what you personally like.

A couple of years ago or so I actually thought about buying a few shares of SCU as a value stock. I've gotten away from that style of investing since, and I guess for me as an investor it's just as well.

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Second Cup brewing new strategies for a comeback following management shakeup
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optionable68
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Re: The Second Cup Ltd. (TSX.SCU)

Post by optionable68 »

IMHO there is simply a clear 3-way race for coffee chains (SBUX, Tim Hortons, McDs) with very high barriers .... remember what happened to Timothy's ? Country Style? Not sure Second Cup has what it takes to hit the big leagues.
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Thegipper
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Re: The Second Cup Ltd. (TSX.SCU)

Post by Thegipper »

another that was around for awhile was a place called Robin's Doughnuts.
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Re: The Second Cup Ltd. (TSX.SCU)

Post by AltaRed »

optionable68 wrote: 13 May 2017 19:19 IMHO there is simply a clear 3-way race for coffee chains (SBUX, Tim Hortons, McDs) with very high barriers .... remember what happened to Timothy's ? Country Style? Not sure Second Cup has what it takes to hit the big leagues.
I don't think there is room for another national major chain. What I do see more is local/regional franchises that garner the support of locals. Such as Blenz Coffee with some 65 locations or so, almost exclusively in BC. I will patronize them and other locals such as Bliss Bakery (Kelowna area only) before I consider others.
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Re: The Second Cup Ltd. (TSX.SCU)

Post by Hammerer »

Based on my limited understanding of the company's accounting/financials before, it appeared that since they franchise/lease most of their locations, they had little hard assets, and they only managed to have "shareholder equity" by valuing their trademark at the amount of their debt. In other words, pretty much a zombie company.
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Re: The Second Cup Ltd. (TSX.SCU)

Post by 2 yen »

Thegipper wrote: 13 May 2017 19:35 another that was around for awhile was a place called Robin's Doughnuts.

Most disgusting breakfast I've ever eaten. Literally a white, glue-like ooze was seeping out from between the buns. Never been back.

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Re: The Second Cup Ltd. (TSX.SCU)

Post by goleafsgo »

There is a Second Cup at the street-level retail portion of the condo building where we own a unit. The place is ALWAYS hopping. It is one of our regular haunts and it will break our hearts if we lose it.

It seems to be another case of second-tier businesses fighting an uphill battle against their giant competitors....Timmies, Starbucks, etc. Funny, but I don't even think that the product is the problem for Second Cup. I prefer their coffee and sandwiches etc. when compared to any of Tim's equivalents. But, it seems they have not been able to find that niche, that place in the consumer's psyche, that the giants seem to be so good at doing.

Unfortunately, the writing seems to be on the wall. Any news from the company during the past 12-18 months seems to be nothing but bad. We hope they are able to turn things around.
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Re: The Second Cup Ltd. (TSX.SCU)

Post by CalgaryGuy »

I often think this is where investors miss most of their opportunities (myself included, I won't be buying it). Things do look grim, but the chances of turnaround are not zero, so the stock must have value. That value might be twice what it is trading at right now, given its expected return. Most investors won't touch it though.
Taggart
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Re: The Second Cup Ltd. (TSX.SCU)

Post by Taggart »

CalgaryGuy wrote: 09 Jun 2017 09:00 I often think this is where investors miss most of their opportunities (myself included, I won't be buying it). Things do look grim, but the chances of turnaround are not zero, so the stock must have value. That value might be twice what it is trading at right now, given its expected return. Most investors won't touch it though.
I don't mind having the occasional coffee at Second Cup but when I look at the Key Stats over at Morningstar it doesn't make me want to rush out and buy the common shares.

Now, I like to buy into companies that at least have earnings (a heart beat) and are willing to reward investors with a dividend, preferably a growing one. Since sticking to these kinds of companies it suits me a lot better and it's very uplifting. Most of them seem to get better and better as the years roll on.

If I buy deep value equities I always seemed to end up with the klunkers that just got worse and worse. It was totally depressing especially in a bull market. Some investors are really good at spotting good value versus value traps and I acknowledge that.
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Re: The Second Cup Ltd. (TSX.SCU)

Post by AltaRed »

Taggart wrote: 09 Jun 2017 15:39 If I buy deep value equities I always seemed to end up with the klunkers that just got worse and worse. It was totally depressing especially in a bull market. Some investors are really good at spotting good value versus value traps and I acknowledge that.
My track record is less than stellar as well. I try not to re-learn my limitations.
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Re: The Second Cup Ltd. (TSX.SCU)

Post by rharvey199 »

with so many high quality stocks out there i can't think of any reason second cup would make into one of the 30 names i own. they have tried numerous things to gain traction in the marketplace but none have taken with consumers. if the stock doubles then good for people who own it - i won't be one of them. what i am kicking myself for was not pulling the trigger on NVIDIA a couple of months ago when it dropped to $92. even with yesterdays sell off its $149.60 :?
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Re: The Second Cup Ltd. (TSX.SCU)

Post by randomwalker »

Taggart wrote: 09 Jun 2017 15:39
If I buy deep value equities I always seemed to end up with the klunkers that just got worse and worse. It was totally depressing especially in a bull market. Some investors are really good at spotting good value versus value traps and I acknowledge that.
You're not alone there. Bought, sold and bought and hold the Becker Milk Company (BEKB) a no growth southern Ontario real estate company, major (almost only) tenant is Couche Tarde (ATD.A) Trades below book, reasonable PE, profitable to the point where they sometimes pay a special dividend, current yield just over 5%, has been under "strategic review" (possible sale) since 2013 and had an offer of about $21 which I sold into and bought back when it wasn't accepted. Closely held by a couple of families who must want more than $21. Thinly traded (by appointment only). Sits in my portfolio doing next to nothing. There was one value/ hedge fund that held a position at one time not sure if they still do. Nobody covers or cares about it, classic value trap.

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Of interest perhaps to those familiar with "Deep Value" investor "Toonies for Loonies" Irwin Michael of ABC funds who seems to have thrown in the towel on the style of investing that made him famous, well at least popular.

From the Desk Of Irwin Michael – April 15, 2016

"Over the past decade there have been many changes with respect to traditional value investing. For instance, over the years we were able to purchase deeply undervalued stocks trading at half of book value, net asset value and/or at several times cash flow multiples...Looking back many changes occurred with regard to the securities markets and it is our view that the stock market has become increasingly efficient..."

http://abcfunds.com/media-centre/from-t ... l-15-2016/
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Re: The Second Cup Ltd. (TSX.SCU)

Post by Just a Guy »

The company always seems to have had issues. I remember a few years ago the company pulled a whole pile of franchises from owners because they weren't doing things the way the company wanted. It seemed rather unclear as to what was expected, or why they pulled some franchises but not others (this was from one of the franchises that was shut down). It seemed rather fishy, especially when the company opened up a new one across the street from the one they shut down.

It struck me as having some management issues back then, so I stayed away as an investor...even though I like their white hot chocolate.

I haven't heard of things improving much since then.
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