Hilary Kramer's Daily Picks & Pans

Wednesday, May 30, 2007 Guest blogger: Larry Schutts, vice president of Stockwinners.com and a contributing editor for Theflyonthewall.com. Larry looks for stocks with technical and fundamental characteristics indicating gains in the next 30 days. However, price movements may be volatile. He includes a stop-loss price in each post. Consider selling a position should the stop-loss be violated.

Few companies anywhere can claim to have had a more popular spokesman than the founder of a Dublin, Ohio restaurant chain noted for its made-to-order square hamburgers. One just wonders what Dave Thomas would have had to say about the industry's move to trans-fat free oil!

Wendy's International (NYSE:WEN) is one of the world's largest restaurant operators, with more than 9,900 Wendy's Old Fashioned Hamburgers and Baja Fresh Mexican Grill outlets. One in five of the stores is operated by the company. The rest are run by franchisees. The firm also has investments in the Tim Hortons, Cafe Express and Pasta Pomodoro brands. Major competitors include Burger King (NYSE:BKC), McDonald's (NYSE:MCD) and Yum! Brands (NYSE:YUM) .

The stock popped into a bullish "flag" consolidation formation late last month, on word of a solid quarterly report and an announcement that the board was reviewing strategic options to enhance shareholder value. Shares jumped again early this month, on chatter that the company might be receiving a formal takeover bid. The price has since been consolidating in a second flag and is ultimately expected to rise from that one as well.

Brokers recommend the issue with one "strong buy," 12 "holds" and two "sells." Analysts see a 32% growth rate through the next year. The WENPrice to Sales ratio (1.42) and Price to Free Cash Flow ratio (14.68) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $30.29 and $67.19. A stop-loss of $34.35 looks good here.

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