4-Star Stocks Poised to Pop: Panera Bread

Before you go, we thought you'd like these...
Before you go close icon

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, bakery/cafe operator Panera Bread (NAS: PNRA) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Panera's business and see what CAPS investors are saying about the stock right now.

Panera facts

Headquarters (Founded)St. Louis (1981)
Market Cap$3.29 billion
IndustryRestaurants
Trailing-12-MonthRevenue$1.67 billion
Management

CEO William Moreton (since 2010)

CFO Jeff Kip (since 2006)

Return on Equity (Average, Past 3 Years)17.9%
Cash/Debt$229.6 million / $0
CompetitorsChipotle Mexican Grill (NYS: CMG)
McDonald's (NYS: MCD)
Starbucks (NAS: SBUX)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 89% of the 1,296 members who have rated Panera believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars FreeFlyingFool and fellow Fool Thomas Engle (TMF1000), both of whom are ranked in the top 11% of our community.

This past summer, FreeFlyingFool listed several of Panera's tasty qualities:

Solid balance sheet, good growth prospects, and a great customer experience. They'll see some headwinds due to rising food costs, and a double dip could mean that customers eat out less. But the valuation isn't so bad and over the medium term, I think they do quite well.

In fact, Panera currently sports a reasonable PEG ratio of 1.3. That represents a discount to competitors like Chipotle (2.2), McDonald's (1.7), and Starbucks (1.6).

Thomas elaborates on the Panera bull case:

The next report will be reported at the end of October and it should be a good report. They have a lot of growth potential and they have grown their store base without debt. ...

They have similar growth potential as [Chipotle] but the valuation is much better.

I also think beside the growth of their store base, they can take market share, by expanding their menu into bakery goods that in time could create more streams of revenues. The growth areas in which they could expand are numerous. It may not happen until store base growth slows, but in time, they could expand into bakery goods. Their size would give them many economy of scale advantages.

What do you think about Panera, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to trackPanera?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Panera, Chipotle, and Starbucks. Motley Fool newsletter services have recommended buying shares of Panera, Chipotle, McDonald's, and Starbucks. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners