California Pizza Kitchen (symbol CPKI) is growing domestically and international. With shares stuck around $15, now is a great time to buy. The rapid international growth could someday be as good as Yum Brands (symbol YUM) Pizza Hut has seen.
The company split shares three for two in 2007. There is little debt on the company's balance sheet (70 million as reported foe first quarter 2008 earnings) compared with 12 million in cash. California Pizza Kitchen has just over 200 stores and is in the early stages of its expansion. The company currently has forty percent of its store count in the state of California. Announcements have been made to build stores in Mexico, the Philippines, and South Korea. There are agreements for 3o restaurants in South Korea over the next five years. The first store in Mexico was added in the third quarter of 2007. (The third is currently under construction.) The company also announced a letter of intent to add six stores in Dubai.
The company also offers frozen pizzas through a licensing deal with Kraft (symbol KFT). This deal has produced double digit growth for the company. California Pizza Kitchen will soon be available in freezers as a microwavable single serve frozen pizza.
The shares at $15 are trading at two times book value. The price divided by sales is very reasonable at 0.6. The company announced that it opened five stores in the first quarter of 2008 and is on pace to open 12 for fiscal year 2008. California Pizza Kitchen recently raised guidance for 2008 and now expects a profit of .56 to .65 cents per share.
I recommend buying the stock at or below $15. I see the stock trading back up at $20 within a year.
Price at post: $14.59 05/21/08
Target Price: $20.00 05/21/09
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