Turfscape (39.21)

Timmy's on fire!

April 27, 2012 – Comments (3) | RELATED TICKERS: THI

Tim Horton's (THI) is hitting new 52-week highs right now, up over $57.50 today, and has been on a tear since the start of the year. This Canadian Coffee, donut and sandwich chain has been part of my holdings since I stumbled into one of their stores for a caffeine fix and a maple-glazed during a trip to Toronto in 2006 (THI was spun off from Wendy's with an IPO in March '06). I loved it! I don't know what it is about the coffee and donuts there, but I was immediately hooked.

I'll let you peruse the financials for yourself, but what brought me to Tim Horton's as an investment was the unique view that Canadians hold for this franchise. It is absolutely a part of their National Identity. There is a fondness for Tim Horton's in Canada that goes beyond fan-dom. It's a love and pride from the customers that you might find from an iconic brand like Harley-Davidson (minus the tattoos...well, thinking about it, I'm sure there are Canadians who have a tattoo of Tim Horton's old jersey number 7 from his days as a Toronto Maple Leaf defenseman). This fervor and passion from their customers has driven phenomenal growth (revenues climbing from $1.9B in '07 to $2.85B last year). Yet, Timmy's has had a tough time cracking its southern border and growing in the U.S.

There are franchises in the Northeast and in the Detroit area, but wide-spread growth has eluded THI in the States. There is clearly a cultural difference, and there's no doubt that most U.S. cities have a major glut of competition among fast-food and coffee joints. But I firmly believe that Tim Horton's will crack the U.S. market at some point in the future. I think it hinges on understanding the American customer just a little better to find the right channel for getting that great Tim Horton story to be relevant here.

Disclosure: I own shares of THI and go out of my way during any and all trips to Canada to get coffee and donuts at Tim Horton's. I've also looked into the possibility of opening a franchise in my hometown, and thought about getting a Tim Horton's tattoo at one point. Everything else here is just me flappin' my gums. Go do some due diligence and, if you're in Canada, have a double-double and some Timbits while you do.