Editor’s note: This column is part of our Best Stocks for 2016 contest. Charles Payne’s pick for the contest is Buffalo Wild Wings (BWLD).
While it is a challenge to pick just one stock as my favorite pick for the upcoming year, I’m thrilled to join the InvestorPlace Best Stocks for 2016 contest this year.
There’s no question the stock market has been volatile in 2015, and we’re still seeing this continue as we approach the final weeks of the year. But now that the Federal Reserve question is out of the way, the market will turn its attention back to things like low commodity prices and the weak global economy. My Best Stocks for 2016 choice is a play on the former.
Buffalo Wild Wings (BWLD) is a company I’ve had my eye on for a long time. It’s an owner, operator and franchisor of sports-themed restaurants that feature, well… wings, beer and sports on 50+ televisions at each location.
I’m sure you’ve heard of it. The company started out as a single restaurant in Columbus, Ohio in 1982 and has grown to include at least one restaurant in every state in the country. Today, there are more than 1,080 Buffalo Wild Wing stores located across the United States, Canada, Mexico and the Philippines.
There’s no doubt that this stock has been a winner throughout the years, but recently it’s been a victim of its own success. In the first quarter, the company missed EPS estimates by $0.11 and the stock fell 17% the next day. In the second quarter it missed by $0.14, but the stock popped 10%. And in the most recent third quarter the company missed earnings by $0.29 a share, causing the stock to fall 12% the following day.
So why would I recommend this stock as my 2016 “best stock?”
That’s a fair question since BWLD’s performance was inconsistent in 2015. Here are a few reasons to back up the truck on this one: 1) I do expect earnings to stabilize in 2016; 2) The risk/reward characteristics look great at today’s prices, and 3) BWLD stands to benefit from the savings at the pump that are making their way into restaurants.
If BWLD can beat the Street each quarter next year, it will be a huge winner in 2016 with the potential of being a $250 stock in no time.
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