The shares of burger joint Shake Shack (SHAK) have undergone a steep pullback during the second half...
Buffalo Wild Wings: A Spicy Pick
06/19/2014 7:00 am EST
Our latest featured breakout stock operates a chain of restaurants featuring chicken wings; the stock has broken out from an 11-week flat base and is trading near a new all-time high, explains Leo Fasciocco, editor of Ticker Tape Digest.
With annual revenues of $1.3 billion, Buffalo Wild Wings (BWLD) operates owner and franchised restaurants featuring a variety of made-to-order menu items including Buffalo, New York-style chicken wings spun in one of their signature sauces.
The widespread appeal of the company's concept establishes its restaurants as inviting, neighborhood destinations. The concept evolved from a university environment.
BWLD's stock came public in late 2003 and traded around $11. The stock hit a peak of $47 in 2007, the top in the prior bull market. BWLD then pulled back to as low as $14.50 in 2008 due to the bear market.
However, since then, the stock has been hot, soaring and hitting an all-time high of $159.81 in March, before the shares faded back.
Now the stock is breaking out again. The move comes with a widening of the spread. That shows good buying interest. The stock's momentum indicator is solidly bullish.
We see a key drive for a potential breakout being the prospect of strong earnings for the upcoming second quarter. The Street is forecasting a 35% jump in profits to $1.19 a share from 88 cents a share a year ago.
The highest estimate on the Street is at $1.25 a share. BWLD topped the Streets' quarterly consensus the past four quarters—by 14 cents a share, 4 cents, and 9 cents, and 9 cents.
Overall, earnings for the year should leap 34% to $5.09 a share from the $3.79 the year before. Looking out to 2015, the Street projects a 17% gain in net to $5.96 a share from the anticipated $5.09 this year.
The stock sells with a price-earnings ratio of 30. That is high for a restaurant stock, but okay with BWLD because of the strong earnings outlook this year.
Institutional sponsorship is very good. The largest fund holder is 5-star rated Fidelity Growth Company Fund with a big 6.5% stake. A key buyer recently was 4-star rated Lord Abbett Developing Growth Fund, which purchased 87,441 shares.
We rate BWLD as a good intermediate-term play. There is a chance for a stock split that could also push the stock higher. We are targeting BWLD for a move to $185. A protective stop can be placed near $147.
More from MoneyShow.com:
Related Articles on STOCKS
You still have an opportunity to run wild with the hogs. Harley-Davidson (HOG) has room to run and i...
We have a new recommendation based on another unexpected theme: bipartisan legislation. Our latest i...
Loews Corp. (L) reported a strong quarter, with net income up for the quarter and year-to-date (from...