1 Super Growth Stock Down 22% to Buy After a Recent Pullback as We Head Into 2025

As we approach the end of 2024, investors are keeping a close eye on the market for attractive opportunities. One such opportunity presents itself in the form of Wingstop (WING), a fast-casual chicken wings chain that has experienced a recent pullback of 22%. Despite this temporary setback, Wingstop's fundamentals and growth prospects make it an appealing investment as we head into 2025.

Wingstop's franchise model has been a significant driver of its growth and resilience. With franchisees operating 98% of its locations, the company offloads most capital and operational risks, maintaining high margins and minimal capital expenditures. This model allows Wingstop to grow with minimal investment, as franchisees fund store openings and operations. Additionally, the company's straightforward menu and focus on digital orders for carryout and delivery enable high throughput potential, further boosting growth.



Wingstop's digital ordering and simplified menu have been instrumental in its recent performance and growth prospects. With over 90% of orders coming from carryout or delivery, the company's focus on digital channels has allowed it to maintain high throughput and adapt to changing consumer preferences. The simplified menu, featuring 11 wing flavors and a few side items, has enabled Wingstop to streamline operations, reduce food waste, and enhance customer satisfaction. This combination of digital ordering and a straightforward menu has contributed to Wingstop's 20 consecutive years of same-store sales growth and its ability to open new stores at a rapid pace, with 106 net new locations in the most recent quarter.



Wingstop's dividend growth strategy has significantly contributed to its investment appeal, even after the recent 22% pullback. Since 2017, Wingstop has grown its quarterly dividend from $0.07 to $0.27, a 286% increase. This growth has transformed the company's yield from 0.7% to 3.5% on the original cost basis, making it an attractive option for income-oriented investors. Despite its stretched valuation, Wingstop uses only 20% of its free cash flow to fund its 0.3% dividend yield, leaving ample room for future growth.

Geopolitical dynamics, such as trade wars and shifting policies, can significantly impact Wingstop's international expansion plans and overall growth trajectory. As Wingstop aims to quadruple its store count, with 4,000 international locations, geopolitical stability is crucial for successful expansion. Trade wars and protectionist policies can hinder international growth by increasing tariffs, reducing consumer spending, and disrupting supply chains. For instance, the U.S.-China trade war has led to retaliatory tariffs on U.S. goods, potentially impacting Wingstop's international sales. Additionally, shifting policies, like changes in immigration laws, could affect the availability of labor, further complicating expansion plans. Therefore, investors should monitor geopolitical developments and assess their potential impact on Wingstop's international growth trajectory.

In conclusion, Wingstop's franchise model, digital ordering, simplified menu, and dividend growth strategy make it an attractive investment opportunity as we head into 2025. Despite the recent pullback, the company's strong fundamentals and growth prospects position it well for continued success. However, investors should remain vigilant of geopolitical dynamics that could impact Wingstop's international expansion plans. By carefully evaluating these factors, investors can capitalize on the potential of this super growth stock.