Casey's General Stores: Top 10 Pizza Chain No One's Appreciating?

When it comes to pizza, Deutsche Bank analyst Karen Short thinks Wall Street is mostly overlooking one top stock with a compelling risk/reward balance. While names like Domino’s Pizza, Inc. (NYSE: DPZ) and Papa John’s Int’l, Inc. (NASDAQ: PZZA) get much more coverage, Short argues that Casey’s General Stores Inc (NASDAQ: CASY) is flying under the radar.

“They are a top #10 pizza chain in the US, and they have consistently generated 2-yr stacked comps above PZZA, and at least in-line with DPZ,” Short said of Casey’s. In her latest note, she raised Deutsche Bank’s fiscal 2017 EPS estimate for the stock from $5.53 to $5.70, upped the firms price target from $120 to $130 and upgraded the stock from Hold to Buy.

Related Link: Goldman Sachs Removes Domino's Pizza From "Conviction Buy" List

Short said the primary risk to her bullish thesis is lower fuel margins. The firm estimates fiscal 2017 fuel margins of $0.158, but Short clarified that fuel margins as low as $0.10 would still only reduce Deutsche Bank’s valuation to $110. Clearly, the firm sees very little potential downside to the stock at current levels.

So far in 2016, Casey’s stock has lagged both Domino’s and Papa Johns, falling 6.7 percent year-to-date. The $130 price target represents about 18 percent upside.

Disclosure: The author holds no position in the stocks mentioned.

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