Hungry Investors: Try Buffalo Wild Wings

Investors often turn to cigarettes, utilities and drugs -- recession-proof industries -- when the economy stalls. They might want to consider adding chicken wings to that list.

Buffalo Wild Wings (BWLD Quote), a restaurant chain that specializes in this sports-bar staple, has jumped to the top of our dwindling list of "buy"-rated companies. Its stock has jumped 64% in the past year. We expect it to outperform rivals Papa John's International(PZZA Quote), Jack in the Box(JACK Quote) and Chipotle Mexican Grill(CMG Quote), which are all rated "hold."

The company got its start in 1981, when two Buffalo, N.Y., natives moved to Ohio and decided to bring a taste of home to the Midwest. They opened their first restaurant near Ohio State University in Columbus. The company now runs 567 locations in 39 states, including 67 locations that were added last year.

The restaurants, which offer customers 14 different wing sauces, attract sports fans who come to drink beer and watch games on big-screen televisions. The company is airing a new TV commercial each week of the NCAA basketball tournament. So far, demand for sports entertainment appears to be trumping recessionary pressures.

Buffalo Wild Wings, which is now based in Minneapolis, posted record results in its fourth quarter despite the fact that Americans are spending less. Revenue rose 33%, beating the average 18% gain of companies in the hotels, restaurants and leisure industry. Net income climbed 29%; its per-share earnings have increased year over year in the past eight quarters.

Chief Executive Officer Sally Smith said in the company's quarterly statement that 2009 was off to a great start. Same-store sales at company-owned restaurants in January rose 8%, while sales at franchise locations increased 7%.