Now, Burger King Looks More Appetizing

The Fat Is Drained OffBurger King Holdings (<ticker symbol=
) leaped out of the frying pan into the fire in early August when it reported disappointing results for its fourth quarter ended June 30. The stock, which tumbled 10%, to 13, on Aug. 2, has since inched up to 14.62. Linda Killian, portfolio manager at IPO Plus Fund, which owns shares, says the sell-off makes the world's No. 2 hamburger chain "even more attractive." Killian, who is also a principal at Renaissance Capital, which advises the IPO Fund, says this is because Burger King has the management and skilled personnel to fire up the company and boost sales and earnings. John Ivankoe of JPMorgan Securities (JPM ) has reiterated his rating of "overweight" on Burger King, which went public at 17 on May 17, and he agrees that the stock's fall is a "compelling value opportunity for long-term investors." He says the company's turnaround and strong cash flow are "intact." He figures Burger King will earn $1 a share in the year ending June 30, 2007, and $1.17 in fiscal 2008, up from 86 cents in 2006.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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