SONC has massive growth prospects. It is focused primarily in the south and has lots of room to move to the north. The executives are confident and have experience in expanding as they have succeeded in doing so in the past. Fast Food has historically exploded once reaching New York. It is opening up thousands of new stores per year. Plan to see this stock go from the 20's to the 60's after its expansion.
SONC was added to Matthew Ziehl's RS Small Cap Core Equity Fund (GPSCX) in July of this year. He says most of the bad news has largely been priced into the stock. "Restaurants in general have had a very tough year with rising food and labor costs," Ziehl said. "Sonic isn't immune to those issues." Sonic also has a strong pipeline of new restaurants, mainly through franchise arrangements, which could boost sales. The company is also in the early stages of refreshing existing units.
"They've always been just a drive-in restaurant, but now they're starting to add drive-through locations," Ziehl said. "That's going to increase overall traffic and store-level sales." He's expecting earnings per share growth in the high-teens for the next several years.