Why First Watch Restaurant Group Topped the Market Today
Key Points
She feels its stock could appreciate by nearly 30%.
The company has significant room for expansion, plus an interesting philosophy behind its business.
On Wednesday, an analyst launched coverage of First Watch Restaurant Group (NASDAQ: FWRG) with a bullish note, and investors took this to heart. Collectively, they pushed the veteran dining company's shares up by nearly 4% across that day's trading session.
First coverage
First Watch, the company behind the eponymous breakfast-brunch-and-lunch restaurants, was the subject of an inaugural analysis by Freedom Capital's Lynne Collier (who, incidentally, initiated coverage on it and four other restaurant stocks). She believes First Watch stock is a buy at a price target of $17. That's more than 27% above the stock's most recent closing price.
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According to reports, Collier wrote that she considers the company to be an up-and-coming leader in the breakfast segment. She added that it has posted excellent returns and has plenty of room for growth.
The analyst also believes First Watch stock is notably undervalued, particularly after recent investor sell-offs. According to her calculations, it trades at a PEG ratio just over 0.7, indicating it's notably undervalued.
Constant menu moves
It isn't easy to find a fresh concept in American dining these days, but First Watch seems to be scoring with its practice of rotating the menu several times a year to capitalize on peak seasons for certain ingredients.
At the moment, its footprint is small compared to other companies in the big restaurant space. Its potential for expansion, combined with a focus on the breakfast and brunch categories always popular with U.S. consumers, makes its stock absolutely worth consideration as a buy to me.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.