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Aug.10
7:40 PM ET
Monday, 10 Aug 2009
Wendy’s: It’s (Getting) Better Here

Wendy's/Arby's Group at this near $5 level is a buy, Cramer told viewers on Monday, now that the company is finally turning itself around. He pointed to a move into breakfast, growth overseas and other key initiatives as his reasons for the call.

Wendy’s [WEN  Loading...      ()   ] is “the next big fast-food stock to make its move to higher territory,” Cramer said.

He expected a revamped breakfast-menu rollout in 2011 to boost sales. Right now the morning meal accounts for just 2.2% of Wendy’s revenues, which is far less than the industry standard of 22% for other quick-service restaurants. So if the 600 locations testing the menu respond positively, Cramer said, this could be “a huge long-term growth opportunity for the company.”

Wendy’s is also growing its footprint internationally. The food chain is all but saturated in the US and Canada, but a deal was struck with Saudi Arabia’s Al Jammaz Group to franchise 135 dual-branded Wendy’s/Arby’s in the Middle East and North Africa over the next 10 years. And another 35 Wendy’s will be built in Singapore. The jump from national to international “has almost always been accompanied by higher stock prices with every company that’s done it even half successfully.”

The dual-branded restaurant idea worked for Yum! Brands [YUM  Loading...      ()   ], with its KFC-Taco Bell locations, and Cramer expected the same success for Wendy’s/Arby’s. He also liked the fact that the company is sitting on a ton of real estate, the value of which should climb with the rebounding market. Add in a strong second quarter and three blessings from Zagat – best food, best facilities and best overall mega chain – and you can see why Cramer’s so bullish on WEN.

He was right about CKE Restaurants [CKR  Loading...      ()   ], which is up almost 20% since his May 22 call. Well, Cramer called Wendy’s/Arby’s Group “the son of CKE.” He expects the stock to go “much higher.”

Cramer’s charitable trust owns Yum! Brands.

Call Cramer: 1-800-743-CNBC

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