4-Star Stocks Poised to Pop: Middleby

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, food service equipment specialist Middleby (Nasdaq: MIDD  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Middleby's business and see what CAPS investors are saying about the stock right now.

Middleby facts

Headquarters (founded)	Elgin, Ill. (1888)
Market Cap	$1.5 billion
Industry	Industrial machinery
Trailing-12-Month Revenue	$741 million
Management	Chairman/CEO Selim Bassoul CFO Timothy FitzGerald
Return on Equity (average, past 3 years)	21.7%
Cash/Debt	$9.26 million / $241.6 million
Competitors	FMC Technologies (NYSE: FTI  ) Illinois Tool Works (NYSE: ITW  ) Manitowoc (NYSE: MTW  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96.5% of the 2,549 members who have rated Middleby believe the stock will outperform the S&P 500 going forward. These bulls include DaveMarcus82 and All-Star TMF1000, who is ranked in the top 0.5% of our community.

Late last month , DaveMarcus82 applauded Middleby's recent move into the catering equipment business: "$90 million for the Lincat acquisition was well spent, and adding their leading foodservice brands will only bolster this stocks value."

Currently, Middleby even sports a cheapish PEG ratio of 0.9. That represents a discount to listed competitors such as FMC (1.7), Illinois Tool (1.0), and Manitowoc (1.6).

CAPS All-Star TMF1000 elaborates on the bull case:

One of the growth drivers for Middleby's is the need for restaurants to retrofit their kitchens to increase efficiency. Even if the old oven is working well, new models offer a smaller footprint, higher energy savings and can cook faster. ... These new products offered by Middleby that increase energy savings also carry higher margins.

Other companies are working on energy saving ovens and equipment, but the big players such as Manitowoc (MTW) Illinois Tool Works (ITS) and Middleby due to their size should have a big advantage over smaller players. ...

The restaurant industry is expected to make a bit of a comeback in 2011. Fewer restaurant closures and business sales are being reported. ... If this trend continues, the restaurant industry may show signs of improvement. Regardless the restaurant survivors will be looking to find ways to give them an edge in costs, faster cooking times or ways to expand their menus to compete with strong competitors. I think this will keep Middleby busy.

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