The general public believes that the stock market has been on a general downtrend until recently. Well, here’s a story about how the general public seeing only what they wish to see and by large ignoring what they don’t want to see.

During 1997 – 2000, if you ask most people involved in the stock market whether a restaurant stock is more exciting than a technology stock, most people will look at you weird. If you ask people where they think they can grow their money best, they most likely would put to technology stocks. Well not many technology stocks did very well after 2000. But what happened to those boring restaurant stocks?

Contrary to popular beliefs, many boring plain old vanilla stocks that attracted little to no coverage, hype, attention during those boom days, did very well, even after the 2000 market disaster. Of course, there are good and bad, but I just want to dispell the idea that stock market was down during that time. The intelligent investor would be able to find companies with tremendous fundamentals that did exceptional during this period. Let’s take a look at one such stock.

First of all, it’s proper for me to say that this is by no means a solicitation on the stock. I do not own this stock as of this writing, and I’m imposing on myself a trade restriction of 10 days as of this writing to either buy or sell the stock or associated option itself. In fact, I probably will not buy the stock as you can read on. This is to serve as mearely an example of my observations and nothing more. I do not assume any liability for any analysis revealed in this article.

Take a look at Wendy’s International Inc. (NYSE: WEN)., the company that makes those delicious Wendy’s burgers and the parent company of the Tim Horton’s franchise. It’s graph from year 2000 till present is a complete contrast to what most technology stocks performed in the same period. It is a steady high single digit to double digit growth company, but what impresses me is how the company has been able to build it’s book value along with its stock price. Meaning that even though the company’s stock price is rising, it’s not on speculations by traders, but by the company increasing its own vlaue through growth.

One thing that hides this chain from Wall Street analysts is the success of the Tim Horton’s chain. Tim Horton’s has only recently entered the U.S. market but has been thus far executing this expansion in a very efficient manner. With the latest U.S. growth number ringing in at respectable 9.8%. But the company is just not popular with analysts in general.

Which to me, as a contrarian is great news! I’d love the stock to be valued lower. The company has been on my buy list for the better half of the year as I keep seeing the undervalued Tim Horton’s in the eyes of the analysts. The great fund manager Peter Lynch has always talk about using our “advantage”, we can see the things that Wall Street analysts don’t see. We see franchise after franchise opening up, we see Tim Horton’s is always busy. This is a chain that works even in this day of Starbucks and premium coffee. The business is also very simple to understand.

What are some risks? Analysts are worried at the growth numbers for Wendy’s itself. Also, restaurants are susceptible to rise in prices of supplies such as beef, or eggs. Something beyond their control. I’m still waiting for the price to go lower before thinking about making it a part of my portfolio, I’ve waiting for a half year now, the stock is trading at its bottom of its 52 week low as of this writing, and because of its recent earnings report, it’s not likely to win any other fans over.

What I’d like to see the company do is some direction on how they will expand the Wendy’s chain. I feel the Tim Horton’s side will work itself out very well as long as they continue the U.S. expansion. I’d love to see if Wendy’s can market itself as the alternative to KFC and MacDonalds in asia. This is particular trickly due to how Wendy’s have always approach their restaurant design.

When Dave Thomas, the founder of Wendy’s died. I remembered I wonder how Wendy’s will cope with this set-back. That was even before I got interested in investment. I am very pleasantly surprised at the success that this company had turned around with its innovative advertising. And Tim Horton’s is certainly the most profitable restaurant chain in Canada, bar none.

What do you think of my analysis? Any comments, please do share!