Texas Population Boom Lures Business
Gerelyn is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In Texas, there is a population boom going on. The state is expanding at a rate of about 2.1% annually, having added more than 500,000 residents between April 2010 and July 2011 alone, according to Census Bureau data cited in the Texas Tribune. Major cities, including Houston, San Antonio, Dallas, Austin and Charlotte are fueling the boom and attracting new business -- including anything from high technology to restaurants -- in the meantime.
Cupertino, California-based Apple (NASDAQ: AAPL) is setting a precedent by making a $300 million push into Austin, Texas. The maker of the iPhone is building a customer support, sales, and accounting campus that spans an estimated 40 acres and will bring some 3,600 jobs to the city over the next decade, according to Austin Business Journal. In exchange, Apple is expected to receive millions in state and local tax incentives.
Apple chief executive Tim Cook also recently pledged to redirect some Mac computer manufacturing back to the U.S. The high tech company began outsourcing its product manufacturing to Asia beginning in the 1990s amid cheaper labor costs. In response to Apple's U.S. push, tech supplier Foxconn revealed it would be exploring the expansion of its U.S. factory presence, according to CNN Money.
San Jose, California-based eBay (NASDAQ: EBAY) is one-year into its Austin, Texas expansion. The online marketplace company is part of a public-private partnership with Texas in which it was awarded millions of dollars to expand its Austin facility. eBay already employs hundreds in the city but as part of its growing campus is expected to create 1,000 new jobs over the next 10 years. It's going to need that growing workforce with projections for some $10 billion in global revenues from eBay's mobile division alone, according to CNBC.
Not Just High-Tech
High-tech is not the only sector with its sights set on Texas. Dunkin' Brands Group (NASDAQ: DNKN), the parent company of Dunkin Donuts and Baskin Robbins, is making a push in Austin, Texas, where along with partner Coffee Action West, the company is adding two dozen stores to the region. Coffee Action West is comprised of a partnership between former University of Texas athlete Colt McCoy and restaurant veteran Dale Mulvey, in addition to personal investor Michael Karsch. The expansion will include some 21 stand-alone Dunkin Donut stores and a trio of Dunkin Donuts/Baskin Robbins combination stores.
As a result of the flurry of stores that will be added by Dunkin' Brands and Coffee Action West, the city of Austin is now saturated for Dunkin Donuts stores. Dunkin Brands Group will continue its expansion effort throughout Eastern, Southern and Western Texas, however.
Dunkin' Brands, once owned by a private equity consortium including Bain Capital and Carlyle Group, has been a publicly traded company since July 2011. Year-to-date, the stock has advanced more than 20%. Currently, Dunkin' Brands has a high PE ratio of 46 based on trailing earnings. The company recently revised its 2012 EPS outlook upwards to a range of $1.25 to $1.27 per share but revised its revenue projections slightly downward. 2012 Dunkin Donuts comparable store sales are expected to come in at the low end of a projected range of between 4% and 5% growth.
The Canton, Massachusetts-based company has aggressive expansion plans as as evidenced by its most recent growth in Austin, Texas is moving West with its growth plans. Dunkin' Brands currently has about 7,000 retail locations in the U.S. -- where it generates three-quarters of total company revenues -- and hopes to more than double that presence over time, according to a recent investor conference.
Dunkin' Brands' has an app but may need to submerge itself more fully in social media to get the most out of its expansion effort. The company still relies heavily on traditional media sources, including television and print, to promote its products. The corporation takes a percentage of profits from its franchisees to finance marketing efforts.
A Growing Regional Economy
Austin, Texas may be "weird," as the motto goes, but the city is attracting some of tech's fastest growing companies that could choose to create jobs anywhere. Investors in the companies that are growing their regional presence have a clear expansion path laid out for them and much to look forward to. Bolstering high-tech's presence also stands to benefit restaurants, like Dunkin Donuts, which are strategically positioning themselves for the business.
GerelynT has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple. Motley Fool newsletter services recommend Apple and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!