Tim Hortons, Baja Fresh, and Investing in Junk Food

Demand for healthy food might be nibbling away at some of junk food's market share, but by no means is it gobbling up the whole thing (that'd be unhealthy!).

In this MarketFoolery  clip, host Chris Hill and analyst Tim Hanson discuss a quick case for investing in junk food stocks.

A full transcript follows the video.

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This video was recorded on Aug. 21, 2018.

Tim Hanson: If you go to Canada, one thing that's ubiquitous in Canada, Tim Hortons. We went there for breakfast and my kids just could not get enough of the biscuits and the Timbits, which are the equivalent of Munchkins. My son has his Robinhood account now, so he's always on the lookout for stocks to buy. He said, "Can I buy Tim Horton's stock?" And I said, "Yes you can." And actually, I told him a story. A long time ago, when I was in college, I actually bought Wendy's (NASDAQ: WEN) stock on the thesis that Baja Fresh, which they owned at the time, was the next hot concept, and way better than Chipotle . Now, you fast forward a couple of years, Baja Fresh basically was worthless to Wendy's. Chipotle had gone on to be the winner in the burrito space. Obviously since reverted to the mean. But, made a lot of money on Wendy's because of Tim Horton's. They also own Tim Hortons, and Tim Hortons is growing crazy for them, they're growing all across Canada and the U.S.

So, I told Ben the story about owning Tim Hortons. And he said, "I want to buy Tim Hortons stock." I had fallen out of loop with Tim Hortons. When I looked back into it, they're now part of Restaurant Brands International . QSR, clever ticker.

Hill: Great ticker!

Hanson: Which combines Tim Hortons, Burger King, and Popeye's. When my son and I dug into that, he was just blown away one company could have Tim Hortons, Burger King, and Popeye's. I think that's next on his investment list. He already own shares of McDonald's on the thesis that people eat unhealthy food, and that that's just a durable thesis forever. And he's done well in McDonald's, to his credit. It's had a bonkers year overall.

Hill: That's a great thesis, and he's absolutely right about that.

Hanson: You have to keep it simple.

Hill: It is pretty amazing, when you look at what the QSR management has done, in assembling this portfolio. I don't know about you, but I personally am thankful that there is not a Popeye's that is physically close to this office. I would be there so often. It's addictive food!

Chris Hill has no position in any of the stocks mentioned. Tim Hanson owns shares of MCD. The Motley Fool owns shares of and recommends CMG. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Stocks
Referenced Symbols: WEN

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