Conclusion, Investment Implications, Strategy
Papa John’s International (PZZA) appears to be resuming its March advance following a 22% correction from the late August highs. A sustained rise above the $75.88 area would help confirm this and target a 23% rise to $102.25. This is an Asbury Value idea.
Analysis and Rationale
Papa John’s International, Inc. (PZZA) operates and franchises pizza delivery and carryout restaurants under the Papa John’s trademark in the United States and internationally. It operates through four segments: Domestic Company-Owned Restaurants, North America Commissaries, North America Franchising, and International Operations. The company also operates dine-in and delivery restaurants. As of December 29, 2019, it operated 5,395 Papa John’s restaurants, which included 598 company-owned and 4,797 franchised restaurants. The company was founded in 1984 and is headquartered in Louisville, Kentucky.
Chart 1 below plots PZZA daily since March, highlighting its current test of major underlying support at its 200-day moving average currently at $75.88. Not shown is that a number of market internals are starting to improve as PZZA has been testing this major support for the past several weeks.
A sustained rise above the $75.88 area would target a retest of $102.25.
Chart 1
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $79.27 area, a long entry price of $82.93 would provide a 1:5.3 risk/reward ratio (risking $1.00 to make $5.30) with an initial risk of 4.4%.
Table 1
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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.