Burger King (BKC)

In the midst of a turnaround, Burger King's (BKC - Analyst Report) customer traffic is beginning to decline, as diners move to food prepared at home and to competitors value meals, some of which are more extensive than Burger King's. Though these increasing economic headwinds heighten the risk in the company's turnaround, we think the plan is still viable and the shares valuation is compelling, albeit with substantial risk.

Now back in positive unit growth mode after four years of negative or no growth, BKC is poised, in our opinion, to grow earnings at a mid to high-teens CAGR over the next five years by accelerating unit growth, improving average unit volumes through restaurant remodels and new product launches and by expanding restaurant margins closer to those of McDonald's, the category leader.

Moreover, we think BKC shares offer investors an opportunity to participate in the fast-growing economies of Asia and South America, which are central to BKC's expansion plans but where it has a very small presence relative to MCD and Yum! Brands.