EL POLLO LOCO HOLDINGS, INC.

14.87 +0.19 (+1.29%) Sell

Looking to invest in LOCO? Consider it, because it showed marginal outperformance

13 min read

EL POLLO LOCO HOLDINGS, INC. outperformed the broader market on Tuesday. It increased by +1.29% to close at 14.87. On a day when the overall market breadth was 34%, it closed higher than 18% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Themes containing LOCO]

LOCO showed a strong bullish trend over the last 3 months. During this period LOCO increased by +14.83% and saw a maximum drawdown of -12.1%. There was a long signal during this period which returned +13.9%.

Trend

LOCO has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 10 Mar, 2016 to 26 Jan, 2018. Over the last 2 years 11 months and 14 days, LOCO underperformed the SP500 index on 50% days. Which indicates that on days LOCO underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months LOCO delivered losses on 58% days. However, it still managed to end this period in a profit. It's best return during this period (of +21.9%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -4.28%) was on Wednesday, 31 Oct, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 1 Nov, 2018 and went on till 7 Nov, 2018. This bullish trend returned +30.33% to investors.

During the last year LOCO had 8 profitable months and 4 loss making months. Profitable number of months of LOCO and SP500 index were the same. LOCO significantly outperformed SP500 index in Nov 2018, when it returned +22.06% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. LOCO had a longer winning streak of profitable months than SP500 index. It went up in 8 straight months (from Apr 2018 to Nov 2018) during which period it delivered +53.35%.

I would not pre-pay. I would invest instead and let the investments cover it.
-- Dave Ramsey

LOCO is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in LOCO's volatility from 20 Sep, 2018 to 2 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that LOCO has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

SP500 index has more chance of extreme outcomes than LOCO. Therefore, SP500 must receive a lower allocation than LOCO in your portfolio. SP500 index usually has shorter drawdown period than LOCO.

Based on your interest in LOCO you may find it interesting to know that ICPT, NVCN and IX are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.

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