Where Does Buffalo Wild Wings Go From Here?

A reader named Hayward writes:

“Chad, how about a new update on BWLD now that it exploded to the upside.”

No problem, Hayward.

Sports bar and grill chain Buffalo Wild Wings (BWLD) is a stock I have been very bullish on for a long time. Hayward is referring to my post from eight months ago entitled A Wildly Bullish Quarter for Buffalo Wild Wings. The stock has since doubled to more than $42 per share.

The investment thesis was fairly simple back in October and nothing has changed on that end. This is still a popular concept restaurant with very strong growth prospects. BWLD has more than 400 locations with a large portion of them located in Ohio, the state where it was started years ago. With a long term target of 1,000 restaurants, there is enormous expansion potential and few barriers to get there.

The stock has had a huge run as the company trounced earnings estimates, which caused me to trim the position recently as it became a large holding and traded at 30 times next year’s earnings. The stock is no longer cheap, but I still believe the stock will do well in coming years as they approach a national footprint.

I would suggest investors take some profits but still hold onto some of their stock. Since the store base can still more than double from here over the next five years, the stock should beat the market over that period, even if it isn’t cheap anymore at this point in time. Right now Peridot is holding an average sized position in the name, whereas in prior months it was a larger position due to P/E multiple expansion potential (which has since occurred).

I hope that helps, Hayward. If anyone would like to suggest possible topics for future blog posts, feel free to let me know by using the blog’s contact link at the top of the page.

Full Disclosure: Long shares of Buffalo Wild Wings at the time of writing