Compiled from StockScouter ratings by Verus Analytics
Maybe it’s the underdog story. Maybe it's the new image, or the 2.2 percent dividend. Or maybe it's just the food. Whatever it is, investors and diners alike seem to have a hankering for Wendy’s (WEN) lately.
The world’s third-largest hamburger joint reported fourth-quarter earnings on Monday, saying same-store sales grew by 1.9 percent in 2013 and accelerated over the second half of the year. The fast-food chain also lifted its earnings forecast significantly and announced plans for a share buyback program, cheering investors and sending shares up almost 10 percent, where they have pretty much held since.
Wendy’s has been taking aggressive steps to improve its business over the past year: refreshing its image, redesigning many locations, selling some company-owned stores to franchisees and adding popular – and premium-priced -- menu items such as the Pretzel Bacon Cheeseburger.
All the while, the third fiddle of hamburger chains appears to be eating into McDonald’s (MCD) longtime lead. The reigning king of fast food has struggled with same-store sales declines in the United States as well as its Asia/Pacific, Middle Eastern and African markets.
Shares of Wendy’s get a '9' from the StockScouter rating system on MSN Money, where ‘10’ is the highest score possible. Based on StockScouter's analysis, Wendy’s shares are expected to significantly outperform the market over the next six months with less than average risk.
Wendy’s also appears on StockScouter's latest list of 10 top stocks to watch right now.
American Realty Capital (ARCP)
We think the StockScouter rating system developed by Verus Analytics for MSN Money is one of the best tooks you can use when you're trying to decide where to invest.
StockScouter looks for stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the future, based on how those factors have influenced stock prices in the past.
The system assigns each stock an expected six-month return and balances that return against the stock's expected volatility.
Scouter rates stocks on a scale of 1 to 10, and ratings can change daily. Ratings and data in the chart above were current as of this article's publication date.
In addition to the daily top 10 list described above, StockScouter is used by investment research firm Verus Analytics (previously known as the quantitative business unit of Gradient Analytics) to generate a monthly benchmark portfolio of stocks that, refreshed monthly, has outperformed the market since its inception in August 2001.
An investor who began in 2001 by investing in each of the benchmark portfolio's top 10 stocks at the start of the month, selling them at the end of the month and then starting fresh with a new group of 10 stocks, would have generated returns, before trading costs and taxes, of 1,039 percent through Dec. 31, 2013.
Writer Jon Markman, at the time a columnist for MSN Money, collaborated with company researchers on the tool.
Markman suggested rolling over the top 10 stocks every six months to hold down trading costs, a strategy that might be a better fit for most investors; that would yield different results, which would vary based on your starting point.
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