Though there seems to be a Starbucks on every corner, Dunkin' Brands still has ample room to increase its footprint, both domestically and overseas. And with strong growth likely to continue, one analyst is starting coverage on the stock at buy.
"Among mid-cap growth investors, there are very few growth opportunities out there right now," Lazard Capital Markets analyst Matthew DiFrisco told CNBC on Tuesday. And Dunkin' has "very strong" top-line growth, expansion openings and same-store sales.
DiFrisco sees a chance for Dunkin' to more than double its its U.S. stores, to 15,000, particularly in the middle of the country and in the West.
"Accordingly, Dunkin' represents one of the most tangible mid-cap restaurant growth brands, with an expected annual pace of expansion approaching 4 percent to 5 percent over the next decade," DiFrisco wrote in a research note.
"You have about seven to eight years of good visibility around growth domestically," the analyst told CNBC.
Dunkin' Brands can not only open more stores but increase same-store sales with updated sandwich and beverage offerings, K-Cups and a new loyalty program, he said. It can also take its business global to expand the number of locations by 6 percent to 8 percent annually.
"Baskin-Robbins is Dunkin's gem internationally (strongest in Japan, Korea, and the Middle East)," DiFrisco wrote. "However, significant growth opportunities exist in additional developed and emerging markets."
Already up nearly 32 percent this year, his $51 price target implies that the stock can run another 20 percent.
Lazard makes a market in Dunkin Brands securities.