Why Shares of The Pantry, Inc. Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of The Pantry  (NASDAQ: PTRY  ) were up as much as 13% today after the convenience-store chain made changes to its board and got an analyst upgrade. 

So what: Macquarie Research analyst Dane Leone lifted his rating on the parent of the Kangaroo Express convenience-store chain to outperform from neutral, raising his price target all the way from $14 to $29. Leone said that "under a scenario where the assets are redistributed into an effective dealer network the value of the Pantry asset base could be much higher than current valuation." Leone also thought that recent board changes would make a transition more likely.

Now what: Thanks to activist efforts, four of the company's nine board members are newcomers as of the shareholders' meeting earlier this spring, and the board has a new director, Tad Dickson. CEO Dennis Hatchell expects strategic changes, but it's still unclear what the new board will do. Management has considered small acquisitions, and converting to a dealer network, similar to franchising, is another option, but it's important to remember Leone is just an analyst throwing out suggestions. While changes are expected at The Pantry, those improvements may be baked into the stock as analysts are already expecting a sharp turnaround, with the stock trading at a P/E of 26 based on 2015 earnings. Notably, Leone lowered his estimates, reflecting higher operating costs and a sign that challenges remain.

Will this stock be your next multibagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2974635, ~/Articles/ArticleHandler.aspx, 11/26/2014 6:37:30 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement