Panera Bread Company (NASDAQ: PNRA) owns and franchises some 1,200 bakery-cafes, operating under the Panera Bread and Saint Louis Bread banners in 40 states. The stores offer specialty baked goods, made-to-order sandwiches, soups, salads and custom roasted coffees. They also provide free WiFi Internet access. Starbucks Corporation (NASDAQ: SBUX) is a major competitor.

The company pleased investors last week, when it reported Q1 EPS of 47 cents and revenues of $305 million. Analysts had been expecting 39 cents and $302.8 million. Management also guided Q2 EPS to 40-44 cents (39 cent consensus) and FY08 EPS to $2.00-$2.11 ($2.02 consensus). The press release noted, "Company-owned comparable stores sales growth is targeted at 4% to 5% for the year, with approximately 5% of retail pricing expected."

PNRA shares popped on the news and subsequently moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with five "strong buys" and eleven "holds". Analysts expect a 20% growth rate, through the next year. The PNRA Price to Sales ratio (1.38), Price to Cash Flow ratio (13.52) and Sales Growth rate (27.24%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past fifty-two weeks, it has traded between $30.60 and $58.53. A stop-loss of $44.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in either of the stocks mentioned above.