Disclaimer: we are LONG shares of $SAUC in The Dr. Stoxx Options Letter (sold on Marketfy.com) and it is also a stock selected for previous issues of THE MOMENTUM LETTER as sold on DrStoxx.com.

Diversified Restaurant Holdings, Inc.

Nasdaq: SAUC

Industry: Franchise Restaurants

Market Cap: $86M (Smallcap)

P/E: 21.5

P/Sales: 0.5

P/Free Cash Flow: 9.0

Diversified Restaurant Holdings ($SAUC) operates the Buffalo Wild Wings Grill and Bar franchise throughout the United States. As of March this year, the company had 64 franchised restaurants in 5 states producing $162M in sales (nearly double the market cap) and $4M in net income. Income grew 801% this year and are projected to grow another 110% in 2018.

All analysts hold a buy or better on the company with a $4 price target. Share currently have a Zacks Rank of 1 (strong buy) on recent earnings estimate revisions. the stock recently hit highs over $4/share on record historic volume. Yesterday's large profit taking dump was on no news and provides a nice entry here for those who missed the recent 400% 5-month rally.

We see shares of $SAUC trading higher over the next 3 to 5 months based on valuation and price momentum. We would buy down to $2.75 and sell around $4.50.