TRADE INSTRUCTIONS
Date: August 1, 2017
Name: Bojangles Inc.
Symbol: BOJA (NasdaqGS)
Type: Open
Limit: Buy below $13.25

TRADE TARGETS
Holding Period: 2 months
Target Return: 11.3%
Annualized Return: 67.8%
Target Price: $14.75
Stop Loss Level: $11.75

COMPANY DESCRIPTION
Bojangles develops, operates, and franchises limited service restaurants in the United States. Its restaurants offer never-frozen bone-in fried chicken items, made-from-scratch buttermilk biscuits, fixins, and iced tea. As of June 25, 2017, the company had 740 system-wide restaurants, including 314 company-operated and 426 franchised restaurants located primarily in the Southeastern United States. Bojangles was founded in 1977 and is headquartered in Charlotte, North Carolina. Link to company website.

TRADE RATIONALE
After closing out three huge winners for us this morning, our Rapid Profits Matrix is going bargain hunting in the discount bin to put some of that money back to work right away. It found what it was looking for in Bojangles, which briefly traded as high as $16 a week ago before releasing its quarterly earnings report on Wednesday evening. Since then it has shed nearly 20% of its value, even though it met analysts’ profitability expectations for the most recent quarter.

That’s because it did so on declining comparable store sales volume, and guided lower over the remainder of the year for both revenue and earnings.  This is where our RPM became intrigued by the math, as expected total sales were reduced by 2% and new store openings trimmed by 8%, resulting in a 7% downward revision in adjusted diluted net income per share.

Clearly, the stock deserved some punishment as a result, but an 18% decline appears excessive and creates a short-term trading opportunity if the stock reverts to its previous multiples. But you need to move fast and be precise if you are going to participate in this trade; we don’t plan on staying in it long, and once we hit our target price we are getting out fast.

Note: BOJA is optionable but trades on very thin volume so use limit orders when placing options orders.