Applebee%s International develops, franchises and operates casual dining restaurants in 49 states and eight international countries under the Applebee%s Neighborhood Grill and Bar brand. For the FY ended 12/00, (53 weeks vs. 52 weeks), revenues rose 3% to $690.2M. Net income rose 17%to $63.2M. Revenues reflect increased same stores sales anda new advertising campaign. Earnings reflect lower losses on the disposition of restaurants.

May 15, 2001

Last week, Applebee’s declared a 3-for-2 stock split. This week, we are adding Applebee’s to our Current Play list, and with good reason. APPB has been in a strong up trend since March 1st, advancing from a low of $30.50 to today’s close of $43.20, a 43 percent gain. Moreover, we think APPB could continue advancing into its split payable scheduled for June 12th. To that end, ABBP posted a new all-time high today of $44.01, eclipsing resistance at $42.50 in the process. At this point, APPB has no immediate overhead resistance (though the psychologically-significant $45.00 level could present a minor obstacle). As for support, APPB has the 10-dma at $42.94 followed by the 20-dma at $42.12. Traders considering a position in APPB should look for a move through Tuesday’s intra-day high of $44.01 or a bounce off the 10-dma on volume of 150,000 shares traded by mid-day. One caveat for conservative traders, though, APPB’s stochastic is showing it to be overbought, so this trade could be a little more risky than usual.

Picked on May 15th @ $43.20
Change since picked 0.00
Stop Loss @ $40.50

May 24, 2001

Applebee's came back from the dead on Thursday, having rallied back over $43.00 to $43.36. It was looking as if APPB was heading for a test of support around $41 before buyers came back in to boost the stock today. Turning to the chart, we see that the 5-dma at $43.77 has now turned into resistance after providing support since 5/04/01. If APPB can conquer the 5-dma, it has stiffer resistance to face above at $45. The good news about yesterday's sell off was that it relieved an overbought condition on APPB's stochastic. The stock now has room to run before issuing an overbought condition again. Traders looking to add APPB to their portfolio could watch for a move above resistance of $45 on volume of at least 400,000 shares. We are keeping our stops at $40.50 to guard against further downside moves.

Picked on May 15th @ $43.20
Change since picked +0.16
Stop Loss @ $40.50

May 22, 2001

Applebee's pulled back a little on Tuesday, but not before notching a new intraday high at $45.44. This pullback is certainly not enough to get us worried, but we will keep a close eye on APPB's volume. As the restaurateur has been marching higher, volume has been tailing off. We would like to see any further moves above $46 accompanied by volume of at least 400,000 shares. If APPB can get above $46, its MACD will issue a buy signal and the next resistance level becomes $50.00. While shares of APPB may look extended, the stock still only trades at a P/E of 17.52, which turns out to be a discount to the restaurant sector's 29 P/E. While we think that APPB has room to run, traders should probably wait for a pullback to support at $44.20 before initiating new positions.

Picked on May 15th @ $43.20
Change since picked +1.85
Stop Loss @ $40.50

May 20, 2001

Applebee’s posted another winning session on Friday, closing up $0.05 to $44.10, which happens to be another all-time closing high. Unfortunately, there wasn’t much conviction behind Friday’s advance (which is why it was only a nickel) because only 194,700 shares were exchanged, which was less than half the three-month average daily volume of 401,200. Despite the lack of interest on Friday, we think APPB could continue to build on its three-month long advance into its split-payable date on June 12th. To that end, ABBP posted a new all-time closing high today of $44.05. At this point, APPB has no immediate overhead resistance (though the psychologically-significant $45.00 level could present a minor obstacle). As for support, APPB has its 10-dma at $43.28 followed by the 20-dma at $42.63. Traders considering a position in APPB should look for a move through its all-time high of $44.35 or a bounce off the 10-dma on volume of 150,000 shares traded by mid-day. One caveat for conservative traders, though, APPB’s stochastic is showing it to be overbought, so this stock could carry a little more risk than usual.

Picked on May 15th @ $43.20
Change since picked +0.90
Stop Loss @ $40.50