Pizza burning? Get Middleby! (MIDD)

| About: The Middleby (MIDD)
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I've written a little bit about Middleby (NASDAQ:MIDD) in the past -- this growing and extremely well-managed commercial oven maker is doing everything right, it seems, and their recent earnings and price advances have certainly corroborated that statement.

My position in Middleby was built in the winter and early spring of this year over a couple purchases, with a cost basis of about $47.75. It's certainly not the same bargain today near $70, but it still meets at least one of the criteria of a value-priced growth stock: The analysts are still just discovering Middleby, but with the estimates now in the PEG ratio today still stands at just under 1, a value in anyone's book. The current PE is a little steep at 25, but it's hard to argue with management's track record and I think the analysts are likely to be trailing behind the actual growth of earnings in the next few years.

I haven't bought any recently, but MIDD came to mind today because I just read an interesting little updateover at the Fool on growth in pizza sales overseas and the booming times the big pizza franchisers are experiencing in China and other asian markets. They didn't talk about Middleby, but gave some interesting data on the impact on the big pizza chains themselves.

One thing I don't want to do is buy a pizza chain -- Yum Brands and their Pizza Hut brand notwithstanding, I don't see good reasons why one brand or another should become critical enough and longstanding enough to make a difference in asia, and I don't care to bet on any guesses in that area. Too many pizza chains have disappointed investors, and I'm not that interested in giving them another chance.

But growth in pizza restaurants worldwide?

That seems a much safer bet, and the winner of that bet is definitely Middleby -- the best and most efficient (and patented) ovens, specialization in this important niche, and a long list of relationships with some of the bigger companies that are expanding worldwide in addition to a great sales and service network.

Even if we're only thinking that US restaurants will continue to grow and crave efficiency (energy efficiency is a big deal for ovens, especially with energy costs climbing, and Middleby has some great, efficient products), MIDD is a solid bet for long term performance. But if we really believe this trend toward eating out and chain restaurants and, indeed, pizza, is going to continue to expand internationally, then Middleby is much more than just a solid bet.

Either way, I love management and I love the positioning of the company and the product -- and it's not particularly expensive even now, after all this share price expansion during 2005. I might consider adding to my position if we get a dip during the next few months with earnings, something to keep an eye out for.