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“We are selecting Priszm as an income investment leading into 2006 at $9.50 a share, or, preferably, on unit price weakness. Based on general technical indicators, we would not be enthusiastic about purchasing units, which can be illiquid, at or above $10 per unit. Our expected trading price range leading into 2006 is between $8.00-$10.00 per unit.” Jan 2, 2006.
In each of the last two trading sessions Priszm has closed at $10 per unit, or the upper end of our expected trading price range. The $10 ceiling is an important consideration for current and potential unitholders insofar as it could be a poor entry/accumulation point. However, whether QSR trades at $9, $10, or $11 a unit our opinion that the trust represents an attractive mix of risk and reward is unlikely to change.
News that Canada is testing for bird flu and screening travelers from Europe may not be enough to deeply impact the chicken consumption habits of Canadians. However, with any declared case(s) of bird flu in Canada chicken consumption, and KFC sales, could be negatively impacted. Assuming the bird flu does not land in Canada and/or KFC sales are not impacted, one potential positive is that declining chicken prices in Canada is potentially good news for KFC’s margins. (ARG-Chicken Prices ~ Canadian Chicken Market Review).
Until Priszm reports financial results for Q4 and the seasonally weak Q1, it is difficult to speculate on what, if anything, the recent rise in unit price means. Moreover, it is equally challenging to offer any new and useful bird flu/chicken price speculations at this time.
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