Is Wendy's The Next Reddit Rally Stock?
Fast food operator Wendys has found itself the subject of due diligence threads on the popular retail investor site Reddit in the WallStreetBets subreddit. The result has sent Wendys shares to all-time highs and the stock appears headed to be the next retail investor fueled parabolic move. What Happened: A post on WallStreetBets listed several reasons why Wendys Co (NASDAQ: WEN) could be the next stock to break out. The reasons named include a new summer salad, strong social media profile and the companys chicken tendies making it the perfect retail stock. The thread mentions Wendys popular posts on Twitter Inc (NYSE: TWTR), where the company roasts both individuals and companies. Also mentioned on Reddit: the fact that Wendys worked together with another popular retail stock GameStop Corp (NYSE: GME) to roast others. Another thread told retail traders to stop asking when Lambo and get yourself a $WEN Lambo, referencing a Lamborghini luxury vehicle. This thread pointed to strong fundamentals for Wendys. Quarterly dividend payouts, dividend growth, capital appreciation, international expansion and strong same-store sales growth were highlighted in the second thread. The user also pointed to Wendys second-quarter earnings report going against the height of the pandemic last year. Why Its Important: The rise of the retail trader in 2021 has led to several stocks experiencing valuation increases from threads that are seen by millions of viewers on Reddit. There are 10.4 million members on WallStreetBets. The site has been able to quickly get new stock ideas out to investors. An outage on Reddit caused by Fastly Inc (NYSE: FSLY) early Tuesday morning could mean some people have not seen the Wendys posts yet. On Stocktwits, Wendys was the seventh-most popular ticker at the time of writing. Wendys has a dividend, share buybacks and sales growth, which could make the company a turnaround play and a favorite of analysts and institutions. The combination of fundamentals and retail investors looking for the next stock to go higher could make Wendys a perfect meal. Related Link: 10 SPACs And Former SPACs That Could Be Short Squeeze Candidates  Whats Next: In the first quarter, Wendys reported revenue of $460.2 million, which beat Street consensus of $443 million. The company raised its dividend and announced an additional $50-million share buyback in its first quarter report. Same store sales were up 13.5% in the U.S. and up 13.0% globally in the first quarter. The company could have another strong showing in the second quarter facing low comparable sales during the pandemic and with nearly 100% of dining rooms open in the second quarter of this year, compared to 85% in the first quarter. Wendys has filed a preliminary date of August 11 to report second quarter sales. The company posted revenue of $402.3 million in last years second quarter. The company raised its full-year outlook after the strong first quarter, and a strong second quarter could lead to another guidance raise. Wendys sees three pillars of breakfast sales, digital business growth and international expansion as driving the company going forward. WEN Price Action: Shares of Wendys were trading 13.3% higher at $25.99 at last check Tuesday. Shares hit $30 in premarket trading Tuesday, hitting all-time highs. Over the last 52 weeks, shares had previously traded between $18.86 and $24.91. Photo courtesy of Wendy's.