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The disaster we are all still watching play out with Sam Bankman-Fried and his cryptocurrency exchange FTX could actually be suitable for the longer-term viability of Bitcoin, Ethereum, and other cryptocurrencies.
I know it sounds crazy, and if you were an investor who had money in FTX, you are certainly not happy with this, but long-term, the size of the losses incurred by investors in FTX could benefit the crypto market in years to come.
Why?
Since massive losses were incurred, regulators are taking note and investigating what happened.
Sam Bankman-Freid has been arrested and charged with many crimes, including conspiracy, fraud, money laundering, and campaign finance violations.

However, while those charges against him don’t have much to do with cryptocurrencies, it is likely that the investigation into how these crimes were committed and, more importantly, how he and his team at FTX were able to evade detection sooner will lead to some changes in the crypto world.
The change I’m referring to, which would boost cryptocurrencies and in some ways turn a bad situation into a good one, would be government oversight and regulation of the cryptocurrency markets.
Since Bitcoin, Ethereum, and all the cryptocurrencies came into existence, we have had no legitimate regulation or oversight of the industry.
While some believe that is a good thing, a lot of investors have been hesitant up to this point to jump into the world of crypto because there is limited to zero oversight. And I am not just talking about small retail investors who have sat on the sidelines, but big-time money managers who are not permitted to invest client funds in such investments due to their largely unregulated markets.
We are talking billions of dollars that could be invested in Bitcoin, Ethereum, and the other cryptocurrencies, and thus increase demand for these investments and ultimately push their prices higher.
It’s not just money managers, though. Regulation and more oversight could also open the door even more for cryptocurrency Exchange Traded Funds.
We currently have ETF products that track a few cryptocurrencies but nothing that holds a large basket of them. Until this point, the SEC has been very restrictive of new crypto ETFs and set stringent guidelines about what they can hold and how they can invest in cryptocurrencies.
So why do I think the FTX collapse could be good for Bitcoin and crypto?
Typically it takes an event such as we see play out for outsiders to take note and get involved in fixing a problem. Investors losing billions is usually the type of problem needed.
Think of the dot.com bubble bursting or the more recent housing crisis. Regulators didn’t walk in after the fact and say, “we are no longer going to allow technology start-ups to be traded on the public markets.” Nor did they say, “We are no longer going to allow homeowners to have mortgages on homes or allow bankers to buy and sell those mortgages.”
This fact was recently noted by Sen. Patrick J. Toomey (Pa.), the top Republican on the Senate Banking Committee and a leading crypto booster in Congress. He compared the FTX meltdown to the 2008 subprime mortgage crisis.
“Did we decide to ban mortgages?” asked Toomey. “Of course not,” he said. But, the guidelines for opening a mortgage were tightened, and regulators changed rules about what the banks who owned mortgages were required to do in an attempt to protect the banks themselves and the economy as a whole.

I don’t think the FTX collapse will cause regulators to ban crypto, the time and place for that are long gone.
But this could, at the very least, get people talking again about how it should be regulated and what safeguards should be implemented.
Perhaps if that is done, we can avoid this situation occurring again but hopefully make the crypto markets a little less like the wild wild west and more like a civilized society.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

As expected, the Federal Reserve raised the target for its benchmark federal funds interest rate by 50 basis points at its mid-December meeting, to a range between 4.25% and 4.5%.
That was down from the 75 basis-point hikes at its four previous meetings, yet the market’s immediate reaction to the move was an immediate selloff.
Was that a classic “buy on the rumor, sell on the news” reaction — i.e., the Fed delivered exactly what Chair Powell had earlier indicated it would do?
Or was there some element of disappointment that the Fed, despite the more modest rate increase, included in its updated economic projections that most officials expect to raise rates by another 100 basis points, to about 5.1%, next year?
But was that really a surprise, given earlier comments from Powell and other Fed officials?

On a positive note, according to the Fed’s revised economic projections, it now expects inflation to fall to 3.1% next year before declining in 2024 to 2.5% and 2.1% in 2025, putting it at its long-term target.
In November, the year-on-year increase in the consumer price index fell to 7.1% from 7.7% a month earlier, down sharply from June’s 9.1% peak. So it looks like the Fed is optimistic about where inflation is headed, whether its rate-rising regimen deserves the credit or not.
It’s also now calling for U.S. GDP to grow by 0.5% next year, unchanged from this year’s pace, before climbing to 1.6% in 2024.
By way of comparison, the economy rebounded at an annual rate of 2.9% in the third quarter following two straight quarters of negative growth.
The Fed projects the unemployment rate to jump to about 4.5% over the next three years, up from 3.7% currently, due to its rate increases.
(Which begs the question: Whatever happened to the Fed’s mandate to promote full employment? I guess it can’t do that and fight inflation at the same time.)
The Fed has a fairly light schedule in the first part of next year, so interest rate moves are likely to be few and far between anyway. The Fed’s next monetary policy meeting isn’t until the end of January, followed by one in the middle of March, and another one at the beginning of May.
Of course, the Fed could always announce a rate move — either up or down — in between meetings, but it usually only does so in times of crisis.
While investors seemed to be disappointed that we can expect another 100 basis points or so in rate increases, it’s important to put that in perspective.
After all, the fed funds target rate was near zero at the beginning of this year until the Fed started raising rates, by 25 basis points, in March, followed by six more, including the latest one. That would indicate that most of the pain is already behind us, with only a little more—hopefully—ahead of us, if you believe the Fed’s dot-plot chart.
So far, it seems, businesses and consumers by and large haven’t been terribly inconvenienced by all this, as attested by the third quarter’s 2.9% jump in GDP. The Christmas shopping season looks robust. The (few) restaurants I’ve been to have been full, as have the parking lots I’ve driven by.
There are other reasons for optimism. “Supply chain bottlenecks” were constantly in the news at the beginning of this year, but you don’t hear much about them anymore, do you? That’s because more companies have moved their supply lines on-shore or near-shore and away from Asia, while China seems to be relaxing its draconian Covid restrictions, or at least says it is. That should reduce inflationary pressures.
And despite dire predictions following Russia’s invasion of Ukraine last February that oil prices were headed to the stratosphere, prices have done the exact opposite and are projected to drop still lower even as we enter the teeth of winter. The world has managed.
While nobody’s happy about the level of partisanship in Washington, the results of the most recent elections are also a reason for optimism. With Democrats controlling the Senate and Republicans the House, political gridlock may be the happy result, as Congress and the Biden White House will have fewer opportunities to screw things up further than they already have.
Could this rosy scenario come unraveled in 2023? Of course.

Maybe inflation will remain stuck in the mid-single digits — or spike even higher — in which case the Fed will feel compelled to be more aggressive in raising rates, resulting in weaker economic growth and more job losses.
Maybe oil prices will increase as the weather gets colder.
Maybe the war in Europe will get even uglier.
Maybe some unforeseen Black Swan event will occur somewhere.
But right now it appears that the worst is behind us.
George YacikINO.com Contributor
Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

It’s been a solid quarter thus far for the AdvisorShares Restaurant ETF (EATZ) and the restaurant index as a whole, with the ETF and the index up 9% and 17%, respectively, thus far in Q4, a significant outperformance vs. the S&P-500 (SPY).
This outperformance can be attributed to the fact that many restaurant stocks were priced very attractively heading into Q4 after a violent 18-month bear market and because gas prices have been trending lower and inflation looks to have peaked, which both benefit restaurant brands.
The reason? Restaurant food traffic is sensitive to gas prices which impact discretionary budgets, and food costs and labor costs have been rising for two years, pinching the margins of many restaurant brands.

Unfortunately, while some names like Restaurant Brands Intl (QSR) are sitting at 52-week highs, others have remained under pressure, and Jack In The Box (JACK) and Dine Brands (DIN) are two examples of names that haven’t participated much in the recent rally. Given that both are well-run and trading at attractive valuations, I believe both make solid buy-the-dip candidates.
Jack In The Box (JACK)
Jack In The Box is a small-cap stock in the restaurant sector, with two brands, including Jack In The Box and Del Taco, after completing the $585MM acquisition earlier this year.
Unfortunately, the stock has lost over $300MM in market cap since the deal closed in March, with this attributed to weaker restaurant-level margins at both brands of 16.2% and 15.9%, respectively (Jack In The Box/Del Taco). At Jack In The Box, this represented a 390 basis point decline year-over-year, impacted by higher food, labor, electricity, and paper costs.
In the company’s most recent quarter (fiscal Q4), it reported revenue of $402.8MM, up 45% year-over-year, but this was largely due to the new contribution from Del Taco that made the results look much better.
Meanwhile, on a same-store sales basis, same-store sales were up just 4% at Jack In The Box and 5.2% at Del Taco in fiscal Q4, suggesting meaningful traffic declines when factoring in double-digit pricing.
This is not the end of the world, and the rest of the industry is also seeing traffic declines, but it is a little disappointing, given that the quick-service and fast-casual brands have been outperforming casual dining.
Hence, I expected a little stronger results from Jack In The Box.
While this certainly isn’t ideal, and another tough year could be ahead with inflation remaining sticky, the good news is that inflationary pressures are finally easing.
Meanwhile, gas prices remain well below $4.00/gallon, and Jack In The Box is a value option for consumers, suggesting that it should benefit from economic weakness (being a trade-down beneficiary).
Hence, the company is now up against easier year-over-year comps as it heads into FY2023 after a rough first year following its Del Taco acquisition, and we may see trough margins in H1 2023 for the company.
The combination of easier comps and more robust results beginning in H2 2023 alone doesn’t mean we have an investment thesis. I would never buy stock simply because it’s up against easier comparisons.
That said, the valuation is starting to become more reasonable, with JACK trading at just ~10.5x FY2024 annual EPS estimates ($6.46) vs. a historical multiple of 17.0x earnings.
Even if we use a more conservative multiple of 14.0x earnings to adjust for the tougher environment, this translates to a fair value to its 18-month target price of $90.45.
So, if we were to see the stock dip below $59.00, where it would offer a 30% margin of safety vs. fair value, I would view this as a low-risk buy zone.
Dine Brands (DIN)
Dine Brands (DIN) fundamentally is a much stronger name and sports a $1.1 billion market cap. It is best known for its two iconic brands: Applebee’s and IHOP.
The company may be in the less desirable casual dining space that has suffered severe losses in foot traffic due to the pullback in consumer spending.
Still, Dine Brands has consistently outperformed its peer group from a same-store sales standpoint, and it is unique in the fact that it has an entirely franchised model, meaning that while it does suffer from inflationary pressures and traffic declines, this impact is much more muted than those companies that operate their restaurants and are taking the full brunt of rising food, packaging, and labor costs, like Brinker (EAT).
Unlike Jack In The Box, which had a rough year and is more of a turnaround story, Dine Brands has had a very solid year. And while annual EPS is expected to decline ($6.14 vs. $6.54 in FY2021), it remains just shy of pre-COVID-19 levels ($6.95) and is expected to hit new all-time highs in FY2023 at $7.10.
However, the stock has unfortunately been painted with the same negative brush as its peers, given that sentiment is so poor on the casual dining space.
In my view, this is a case of the baby being thrown out with the bathwater, and if we look out longer-term to FY2024 estimates, Dine Brands is expected to see annual EPS climb to $7.95 per share, 13% above pre-COVID-19 levels.
Historically, Dine Brands has traded at ~16.0x earnings, a far cry from its current valuation of ~11.1x earnings. Even in the tougher environment, I believe the company can easily justify a multiple of 13.0x earnings based on its fully-franchised model but offset by its lower unit growth rate than some of its peers.
Using FY2024 estimates of $7.95 translates to a fair value of $103.40 to its 18-month target price, representing a 52% upside from current levels.
The company is paying an attractive 3.0% dividend yield as a kicker.

So, if I were looking to add exposure to the restaurant space, I see DIN as a Buy below $65.00 for an initial position, and I would not be surprised to see the stock trade back above $85.00 within the next year, translating to a better than 30% total return.
While several of the better names in the restaurant sector have already enjoyed strong rallies off their lows, Dine Brands is a clear exception and one name that continues to sit at depressed levels despite solid execution.
Meanwhile, Jack In The Box’s pullback is partially justified, but further weakness should set up a low-risk buying opportunity, assuming the stock heads to new lows below $59.00, which might trigger panic selling among weaker hands.
In summary, I see DIN’s low-risk buy zone at $66.00, with JACK’s at $59.00, and if I were looking for exposure, these two names look like interesting buy-the-dip candidates on further weakness to play an extended rebound in the restaurant sector over the next 18 months with headwinds finally easing.
Disclosure: I am long QSR
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing.

Build-A-Bear Workshop, Inc. (BBW) operates as a multi-channel retailer of plush animals and related products.
The company operates through three segments: Direct-to-Consumer, Commercial, and International Franchising. It runs around 346 locations managed by corporate and 72 franchised stores in Asia, Australia, the Middle East, Africa, and South America.
On November 30, the company announced record fiscal third quarter results. Its total revenue increased 9.9% year-over-year to $104.48 million, beating the consensus estimate by 1.8% and registering the seventh consecutive quarter of revenue growth.
Sharon Price John, BBW President and Chief Executive Officer, attributed this solid performance to momentum and consistency in business with solid brand interest from consumers. She expressed her confidence that the company is on track to deliver the most profitable year in its 25-year history.

Mirroring the above sentiment, the stock has gained 45.3% over the past month to close the last trading session at $25.17 despite the broader market remaining volatile on concern over the Fed’s potential rate hikes to bring inflation down to its 2% target.

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BBW is trading above its 50-day and 200-day moving averages of $17.33 and $17.28, respectively, indicating an uptrend.
Here is what may help the stock maintain its performance in the near term.
Solid Track Record
Over the past three years, BBW’s revenue has exhibited a 10.5% CAGR, while its EBITDA has grown at a stellar 99.4% CAGR. The company has increased its EPS at a 55% CAGR during the same period.
Robust Financials
Despite the negative currency impact of $2.5 million, BBW’s total revenues increased 9.9% year-over-year to $104.5 million during the fiscal third quarter, ended October 29, 2022.
This growth was mainly driven by sales from corporately-managed retail stores more than offsetting a decline in consolidated e-commerce demand (orders generated online to be fulfilled from either the company’s warehouse or its stores).
During the same period, BBW’s consolidated gross profit increased 9.5% year-over-year to $54.33 million, while its net income increased 25.9% year-over-year to $7.46 million. As a result, its quarterly EPS increased 41.7% from the previous-year quarter to $0.51.
Attractive Valuation
Despite solid financials and upward momentum in price, BBW is still trading at a discount compared to its peers, thereby indicating further upside potential. In terms of forward P/E, the stock is trading at 8.74x, 29.5% lower than the industry average of 12.40x.
In terms of the forward EV/EBITDA, BBW is currently trading at 6.24x, which is 32% lower than the industry average of 9.18x. Its forward Price/Sales of 0.79x also compares favorably to the industry average of 0.84x.
Favorable Analyst Estimates for Next YearAnalysts expect BBW’s revenue for the fiscal ending January 2023 to increase 11.9% year-over-year to $460.37 million. The company’s revenue is expected to increase 5.4% to $485.43 million during the next fiscal year.
Technical Indicators Look Promising
MarketClub’s Trade Triangles show that BBW has been trending UP for each of the three time horizons. The long-term trend has been UP since November 30, 2022, while the intermediate-term and short-term trends have been UP since October 18, 2022, and November 25, 2022, respectively.
Source: MarketClub
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, strong swings in price.

In terms of the Chart Analysis Score, another MarketClub proprietary tool, BBW scored +100 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating that the uptrend will likely continue. Traders should protect gains and look for a change in score to suggest a slowdown in momentum.

The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool takes into account intraday price action, new daily, weekly, and monthly highs and lows, and moving averages.
Click here to see the latest Score and Signals for BBW.
What’s Next for Build-A-Bear Workshop, Inc. (BBW)?
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