PowerRatings Stock Spotlight: Papa John's International

Having been an avid connoisseur of the dough, sauce and cheese concoction known as pizza since my college years, my taste is rather refined for this common meal. Chain pizzerias are generally bland tasting and use generic ingredients in their pies in the effort to cut costs and up profits.

One normally has to go to the local pizza joint to get good tasting, fresh ingredients. However, this week's spotlight, Papa John's International (PZZA | Quote | Chart | News | PowerRating), is as good or better tasting than your average neighborhood joint. These guys have really cracked the code on how to mass produce a seriously great tasting pizza pie. In addition, I have found their on line ordering system to be superior to any other pizza place further giving them a competitive advantage in this super crowded space. Enjoying the product was the first step in evaluating this company as a potential investment. Next, I took a look at the long and short term PowerRatings. The company has earned an 8 Short Term rating and a 4 Long Term ranking.

For those of you not familiar with our Long Term PowerRatings, it is an easy to use, dynamic stock decision making tool based on 13 years of extensive, statistically significant studies, across most market environments. Our research has clearly shown that stocks that earn a 10 rating have an 81% chance of trading higher. Those possessing a 9 rating have a 79.1% chance of trading higher and so on down the scale to 1. In this volatile, uncertain market environment, allow Long Term PowerRatings to assist you in building a profitable and safe portfolio.

Papa John's International was first formed in 1984, when founder "Papa" John Schnatter sold his prized 1972 Chevy Camaro for funds to open his first delivery pizza shop. The location was in a retrofitted broom closet in his father's bar. Customers enjoyed the pizza to such a degree, Schnatter was quickly able to expand out of the closet to a nearby location.

The company expanded rapidly, growing to over 3000 units in the next 25 years. Unlike many food chains, they have truly kept their motto of "Better ingredients, Better pizza" despite the growth. Diluted earnings in the second quarter were 51 cents up from 27 cents in the same quarter 2008. Sales were up 0.1% and they raised their lower end full year earnings to $1.44/share. Technically, price remains above the critical 200-day simple moving average, but has suffered a steep sell off to the $23.00/share area where it appears to be finding support.

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David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.