Jack in the Box (JBX): Not McDonald's but still Good

All Americans are finding more bang for their buck at fast food restaurants. Jack in the Box Inc. (NYSE:JBX) is doing well but not as good as its peers.  Thus JBX stock is down 16% YTD and 22% in the last 3 months.  Kids can't eat everyday at McDonald's and that means there is room for Jack to comeback.

The Masters have been watching JBX for a while, and last night they got a huge plug on the Nightly Business Report by Patrick O'Hare, chief market analyst at Briefing.com.  Here's how the conversation went down:

KANGAS: Good point. You write the bargain hunting column at briefing.com where you take a contrarian point of view finding beat-up stocks with strong fundamentals. That brings us to your first pick. Name and ticker please.

O'HARE: Right, it's Jack-in-the-Box. The symbol is JBX. The stock has really fallen on hard times, but we think a lot of the negative factors affecting its operating performance, namely, its exposure to hard-hit real estate markets in California, Arizona and Nevada, a slowdown in consumer spending and escalating food and packaging costs have been factored into the stock which is down about 50 percent from its high last May. At the current price, it trades about a 20 percent discount to its projected earnings growth rate which we think exposes a nice value-based idea for the patient investor.

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KANGAS: And you prefer this over its larger peers, McDonald's and Burger King.

O'HARE: We do. On a relative basis, we really do like McDonald's, but on a relative basis we think right now that the upside return potential for Jack-in-the-Box is greater.

Recent analyst take on JBX:

The Average analyst target price is $31.25 and keep in mind the short float is at 22% right now.

Their next earnings call is coming up on Wed, Aug 6, 2008 -- Jack in the Box Earnings Conference Call (Q3 2008).

The talking heads are convinced that fast food companies will continue to outperform casual dining companies.  As more consumers cut back on pricey meals to pay for soaring gas prices, fast food wins.

Patrick O'Hare put out an article today, going deeper into his comments last night, that link can be found here: http://news.briefing.com/GeneralContent/Investor/Active/ArticlePopup/ArticlePopup.aspx?ArticleId=NS20080730112238BargainHunting

The kindest thing about bear markets, though, is that they provide a great opportunity for long-term investors to buy stocks at more reasonable prices.  We think such an opportunity has presented itself with Jack in the Box, which is trading at 12x trailing 12-month earnings or nearly a 20% discount to its 5-year average.

Place your bets or wait until after the call to make a position, happy trading.