Buffalo Wild Wings
Gains +56%, Exceeds My Target Price
Published: September 22, 2008
It's a great time of year for
sports fans. The baseball pennant races are heating up, college
football is in full swing, and hockey season is around the
corner. That means sports bars will be packed with fans cheering
their favorite teams each night. Most will also be devouring
platters of hot wings and downing a frosty beverage or two while
they're there.
When evaluating a company, it's
always important to separate the stock from the product, as some
of our favorite stores often make for poor investments. However,
at other times it's worthwhile to trust your instincts: If you
like what you see, quite possibly millions of others will see
the same thing. And if that same company also happens to look
great on paper, then being an enthusiastic customer will only
reinforce your bullish opinion.
That's what
first drew me to Buffalo Wild Wings (Nasdaq: BWLD, $42.93),
owner of a chain of award-winning sports bars across the
country. And if I liked the company's tasty food and fun
atmosphere, I loved its financial statements and attractive
valuation. So this past April, I put the stock under the
spotlight in my
Half-Priced Stocks newsletter.
At the time,
management had just outlined ambitious goals calling for a +15%
expansion in restaurant units, a +20% increase in revenues and a
+25% jump in profits. The company had also extended a streak of
19 consecutive quarterly same-store sales gains and was set to
renew a long-term chicken-wing supply contract just as prices
had dipped to about $1.25 per pound.
Better still,
the stock had fallen to $27.50. My fair value calculations
yielded a much higher fair value of $38 per share.
Fast-forward
a few months. Buffalo Wild Wings is shattering its internal
goals as well as Wall Street's targets. In fact, the average
company-owned location is now pulling in sales of $40,000 per
week, helping revenues climb almost +30% last quarter. Earnings
were up an even stronger +45%.
Readers who
heeded this play can chalk up another score. In fact, BWLD
shares are currently sitting above my fair value. They closed at
$42.93 on Friday -- yielding a gain of +56% in just five
months.
In this
month's issue, I highlight an international industrial
conglomerate that, thanks to some recent reorganization, offers
the stability of an established blue-chip leader with the upside
of an up-and-coming small-cap. In
fact, the firm has seen its revenues grow from $70 billion to
$108 billion in the last five years and is expected to increase
them +21% annually. This company is seeing some of its biggest
growth in emerging markets like Argentina, South Korea, Nigeria,
and Saudi Arabia. In fact, with an active presence in almost 200
countries worldwide, it would be easier to list the places where
it isn't making money. Yet for all of its exceptional
qualities, this stock is trading below its fair value and could
easily gain +40% to reach that level.
To read my
complete profile of this exciting company, available only to
subscribers, I invite you to try out my Half-Priced Stocks
newsletter. Follow
this
link to learn more.
|
Nathan Slaughter
StreetAuthority Staff Writer
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