Trading at $7.37 as of June 7, 2002

Dad, remember when you took Mom to Minneapolis for a Mall of America shopping spree three years ago and took me up on my local dining suggestion? You came back raving about Famous Dave's of America(Nasdaq: DAVE) and, as a connoisseur of authentic barbecue, it's not an endorsement one should take lightly. Well, it's time to digest more than the company's signature ribs and sauces. Let's dig into the stock, shall we?

Like its award-winning slow-cooked meats, the stock has been a simmering work-in-progress. The fact that the shares are trading essentially where they were when the company went public back in 1997 might be disheartening. That is, of course, until you realize that the fundamentals are now in place to kick the stock higher for good.

The company is on track to earn $0.29 a share this year and all four analysts covering Famous Dave's see it earning $0.41 a share in 2003. That's better than a 40% growth rate yet the stock is trading at a P/E multiple that is just half of that aggressive pace. The stock also started the month fetching less than its annual revenue run rate. It's a tasty value all around.

But let's get into the nuts and bolts of the company. Until this past quarter, in which same-store sales dipped by a meager 0.4%, the company had posted three years of higher quarterly comps. Still, the company expects favorable comps for the year as a whole.

While the company owns and operates 35 of the 61 eateries, the real growth is in the company's franchising business. High-volume branded concepts with attractive margins rarely suffer a lack of turnkey interest and this chain is no different. While the company had just 15 franchised locations at the start of last year, the company has already contracted for that amount to grow nine-fold over the next five years. Next year alone, the company will see twice as many franchised units erected as the 10-12 restaurants it will open for itself, and that's how the company sees it breaking down all the way to a projected 300 sites by early 2007.

The beauty of franchising is that while the company won't be in line to earn the full 15% in net profits that it has modeled for the average company-owned eatery, it's found money without the capital expenditure overhang. Franchisees pay Famous Dave's $10,000 for each new restaurant and then 5% off the top. It's great business if you can swing it, and Famous Dave's apparently can.

We also have the mighty intangible: management. While most of the top brass tire-kicking is anecdotal, I have firsthand observations here. I was in touch with President and CEO Martin O'Dowd when he ran the show at Rainforest Café in the mid-1990s and I observed him in action as he was gearing up to open the chain's first Disney World location. All of the initial momentum and fanfare that Rainforest Café achieved happened while O'Dowd was there. It just wasn't the same after he left. If I had to grow a young concept, he would be my first choice. And, since Famous Dave himself had Rainforest Café ties -- it's his sauce that graces the Mojo Bones on the menu -- I got to meet the charismatic founder as well.

So, you have a finger-licking good barbecue company here. With restaurant stocks like Applebee's(Nasdaq: APPB) and Cracker Barrel parent CBRL Group(Nasdaq: CBRL) having doubled off their 52-week lows, Famous Dave's offers an intriguing and unheralded gem in an all-weather sector that is back in fashion. Dig in, Dad. I'll fetch you a wet napkin.

Next: Allied Capital »

Rick Aristotle Munarriz eats his own cooking -- and he also owns shares in Famous Dave's. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.

A Stock for Dad represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc. or the company in question, or as representative of anyone or anything other than that specific Fool's thoughts.