The second quarter is Chipotle’s busiest of the year so it's not surprising to see good numbers. But the 5.5% comps are probably a bit better than the market expected given that management has more or less set themselves up for minimal expectations this year in that regard. While only in its nascent stage, the ShopHouse concept is obviously proving out and will be a part of Chipotle’s long-term story. For now though Ells was quite clear in the call that for the foreseeable future, domestic Chipotle stores will be the source of the company’s growth. Management will continue to monitor food costs, but there are no plans to raise prices for the remainder of the year. A relentless focus on the quality of ingredients are a given where Chipotle is concerned and at the end of the day I think both consumers and investors appreciate that.
Freddie Mac has its 2013 First Quarter Refinance Report out. Here's the link to the report in its entirety:
Don't be scared, it's only four pages total. But there is some pretty interesting information in there worth mentioning.
"We estimate that refinances will make up approximately two-thirds of single-family originations this year and about one-half in 2014, compared to about 70 to 75 percent in 2012."
Not terribly surprising here. We refinanced both of our homes during this boom but with rates certain to go up (they already are), it's a safe bet that most who've needed to refi have already done so.
"More than 95 percent of refinancing borrowers chose a fixed-rate loan in the first quarter. Fixed-rate loans were preferred regardless what the original loan product had been."
Hell yeah, they better be. All these exotic ARMs are what got so many in trouble in the first place. I recall quite well selling some of those very products to customers when I worked at Bank of America.
"An estimated $8.1 billion in net home equity was cashed-out in the first quarter of conventional prime-credit home mortgages, down from an estimated $8.2 billion in the fourth quarter and substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006."
That is amazing the difference between now and then. When you hear the statement "people were treating their homes like ATMs" here's the indisputable proof that this was in fact the case. From $84 billion down to $8.1...WOW.
"15% Took "Cash-Out" At Refinance vs. 89% in Q3 2006"
Again, in line with the previous passage, the "house-as-ATM" syndrome seems to be more or less contained.
"The program has helped about 2.5 million refinancing borrowers since its inception through March 2013. HARP loans made up just over 20 percent of first quarter refinance loans purchased by Freddie Mac and Fannie Mae...
Homeowners who refinanced through HARP during the first quarter of 2013 will save an average of $4,300 in interest payments during the first 12 months, or about $358 every month."
Hey, every little bit helps. And it's also worth noting that HARP has been extended through 2015.
Two stocks that stand to gain from this report's implications: Home Depot (NYSE: HD) and Starbucks (Nasdaq: SBUX). There's a pretty good chance that after all this refinancing people are going to stay put for a while. Home repairs and renovations should see a nice little boost from this and Home Depot is the easiest way for investors to gain worthwhile exposure to this sector. Starbucks is just a phenomenal business that is doing everything it can to become that home away from home for consumers. Three big acquisitions over the past couple of years should show some real results and as households are starting to see a little more money in their bank accounts, Starbucks is one of those creature-comforts that presents a relatively low hurdle in convincing people that they have the money to treat themselves to something that they may not have otherwise.
Of course these aren't the only stocks that will benefit. But they are two that are ideal for long-term investors looking to become part-owners of businesses that have and will continue to stand the test of time. For a little extra insight into both companies check out Ask a Fool: How High Can Home Depot Go? and In Hindsight, These Acquisitions May Be Genius.
My name is Jason A. Moser and I'm lucky enough to have a job doing what I love to do: investing. But my family, golf, music, watercolors, reading, writing, current events...these are all things that matter to me. Consider yourself warned.
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