Buffalo Wild Wings (BWLD): Five Reasons This $90 Stock Is Heading to $120

Despite a potential tailwind from steady food prices, it’s difficult to take a bite of Chipotle at 40x price-to-earnings. Management does plan to open between 165 and 180 new restaurants in 2013, so the stock will grow into its high multiple over time. I’d recommend Buffalo Wild Wings (NASDAQ:BWLD) instead for new investors.

McDonald’s, the world’s largest restaurant chain, reported weaker-than-expected first quarter earnings on April 22. Global comparable sales fell 1%, and in isolation U.S. same-store sales fell 1.2%. On the conference call, management stated that “significant headwinds” remain in the United States as consumer confidence weakens.

Analysts at Royal Bank of Canada remain optimistic on McDonald’s following the lukewarm report, and raised their price target to $107 from $98 while maintaining an “outperform” rating.

In spite of benefitting from stabilizing input prices, I can’t recommend Chipotle based on the valuation. For the conservative investor, McDonald’s offers more stability than Chipotle or B-Dubs, and I’m confident that management can weather an uncertain economy better than any other restaurant operator.

Foolish Bottom Line

While consumer preferences may change for an Apple iPhone over a Samsung Galaxy, America’s love for chicken wings, beer, and sports isn’t likely to abate anytime soon. Readers should consider an investment in Buffalo Wild Wings, which offers growth at an attractive valuation.

B-Dubs is developing a widening economic moat from store expansion, and the company doesn’t have any comparable competition on the same scale, publicly traded or otherwise. Readers will receive an update from Buffalo Wild Wings (NASDAQ:BWLD) when the company reports first quarter 2013 results on Monday, April 29 after the market close.

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The article 5 Reasons This $90 Stock Is Heading to $120 originally appeared on Fool.com.

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