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The Overview

On Friday, Buffalo Wild Wings (NASDAQ:BWLD) soared after it was upgraded to BUY from NEUTRAL by research firm Miller Tabak. This nice gain added to Buffalo Wild Wings' strong YTD stock performance of 41.1%, and shows the company is steadily gaining momentum. Compared to the prior quarter, there has been already been a 5% increase in the number of institutional funds owning the stock; This is a direct result of Buffalo Wild Wings' blowout quarters-- many of which exceed CAN SLIM requirements-- as well as a steady acknowledgment by investors that Buffalo Wild Wings has established a significant niche for itself in an industry usually saturated with competitors.

The Niche

Buffalo Wild Wings engages in the ownership, operation, and franchise of restaurants in the United States, sports-themed restaurants that specialize in personalization of chicken wings, and extensive multimedia systems for entertainment. It has been renowned for its affable nature and provides customers with significant dining flexibilities. As a result, Buffalo Wild Wings restaurants have won dozens of “Best Wings” and “Best Sports Bar” awards across the country.

Although there are countless restaurants specializing in chicken wings, Buffalo Wild Wings has a degree of brand recognition that trumps them all, one which is marked by unprecedented expansion. Buffalo Wild Wings recently opened its 800th restaurant, and, according to Mark Smith, analyst at Feltl & Co., "they could double that by the time they finish expanding in the U.S. and Canada." According to its 10Q, Buffalo's long-term target is for 1,500 units in the U.S. and Canada, showing that this $1.14 Billion market cap company still has huge room for expansion.

Compounded with its aggressive expansion, widespread brand recognition, and reputation for service excellence, Buffalo Wild Wings also stands to benefit from the ending of the NFL and NBA lockouts, which help draw large amounts of sports enthusiasts to the restaurant. In fact, I am personally going to spend my Christmas Day at my local Buffalo Wild Wings rooting for the Dallas Mavericks and Chicago Bulls, as they go up against the Miami Heat and LA Lakers, respectively, in the first games of the NBA season.

The Result

Despite the lackluster economy, Buffalo Wild Wings is destroying its competition not only in the chicken wings sector, but the entire restaurant sector. Its 4Q Earnings-Per-Share for 2011 was up 30% from the same quarter EPS of 2010. Moreover, EPS popped 20% in 2007, then 25% in 2008, 23% in 2009 and 24% in 2010, with analysts expecting a 26.7% increase in EPS for 2011 compared to 2010. This positions Buffalo Wild Wings as the ONLY restaurant stock to post 20%+ earnings growth each year from 2007-10. The company expects the same for this year, resulting in its excellent 3 Year EPS Growth Rate of 25%.

It also should be noted that Buffalo Wild Wings has had 4 years of consecutive EPS Growth. This progressive consistency of double-digit earnings growth shows that Buffalo Wild Wings is prospering and its growth has been largely unaffected by extraneous factors or fiscal variations. This year alone, Buffalo Wild Wings has experienced tremendous growth. The Average EPS Growth of its last 3 quarters is a healthy 28%, estimate revisions are up, and the current quarter is expected to outperform the same quarter of last year's by 21%. Things are looking extremely positive for Buffalo Wild Wings' future also. Buffalo Wild Wings is expected to grow its bottom line at a progressive rate of 21% over the next five years. In perspective, McDonald’s (NYSE:MCD) expects a relatively paltry rate of 10%, Yum! Brands (NYSE:YUM) estimates growth around 13% and Starbucks (NASDAQ:SBUX) anticipates growth around 17%.

Earnings aren't the only aspect of Buffalo Wild Wings that have been increasing consistently. Its 2011 4Q sales were up 31% compared to sales figures of the same quarter a year ago. Buffalo Wild Wings has had a 3-Year Sales Growth Rate of 21%, which shows increasing consumer demand for the Buffalo Wild Wings experience. It also has a healthy Annual ROE of 16.5% and is debt-free.

The Verdict

Buffalo Wild Wings is a beacon of consistently progressive growth, the hallmark of prospering companies and excellent stocks. It exceeds the vast majority of CAN SLIM requirements, and its future looks extremely positive. Predicted future earnings growth rates for Buffalo Wild Wings have outpaced that of many of its competitors, and Buffalo Wild Wings' vision of aggressive expansion, while maintaining personable restaurants, will be a key factor in its ascent to the top of the restaurant industry. Buffalo Wild Wings is an excellent momentum stock that is in pristine condition, one which I strongly recommend at least glancing over.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BWLD over the next 72 hours.

Source: Going Wild Over Buffalo Wild Wings