Relishing a hot dog stock

NEW YORK (CNNMoney.com) -- It's that time of year again. Many Americans will dust off their grills to celebrate the 4th of July, wave flags and watch firework displays.

But there's another Independence Day tradition. Nathan's Famous, a chain of fast food eateries, will sponsor the annual frankfurter gorgefest on Coney Island in Brooklyn, where contestants attempt to scarf down the most hot dogs within a 12 minute time frame.

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The contest has gained a lot of attention in the past few years. The event is even aired live on Disney (Charts, Fortune 500)-owned ESPN.

But this year, there is even more curiosity about the event since it is uncertain if the reigning champion, Takeru Kobayashi, who is said to be suffering from a severe jaw injury, will actually compete. Some have suggested that the injury report is a ploy to offset other contestants.

The hot dog eating contest has helped make Nathan's a popular brand. But many investors may be surprised to know that the franchise fast food chain company is a publicly traded company and its stock has been on a roll.

Shares of the hot dog seller are up 22 percent this year, and last month the company reported stellar results for its fiscal fourth quarter, which ended in March.

The company said fourth-quarter earnings soared 97 percent from a year ago and revenue jumped 12 percent.

Nathan's Famous (Charts), which also owns the Kenny Rogers Roasters and Arthur Treacher's brand names, recently agreed to sell its Miami Subs Corp. unit for $3.25 million. The buyers have already paid $850,000 in cash and will pay another $2.4 million over a four-year term.

However, investors may be wary of Nathan's because it is not followed by Wall Street.

This means that there are no analyst estimates to give investors some sense of how it will perform in the future. So that makes the stock a bit riskier than most.

Trading volume also is thin, with only about 12,000 shares a day trading on average for the past three months. Stocks with light volume can often be volatile.

But even though the company may be small and overlooked by analysts, Nathan's ranked 89th on FSB's 100 fastest-growing small public companies this year with a market value of $105 million.

The stock is valued at nearly 20 times earnings for the past 12 months, comparing favorably with larger fast food chains McDonald's (Charts, Fortune 500) and Yum Brands (Charts, Fortune 500) which trade at 17 and 21 times earnings in the past year, while Burger King and Wendy's trade at 35 and 71 times earnings for the past 12 months respectively.

So if investors are hungry for a bite of a tasty treat, Nathan's could be one to stuff their face in. Just don't go overboard like Kobayashi.