The Collins Foods Ltd (ASX: CKF) share price has grown by 435% over the last five years.
Collins Foods is a large franchisee of KFC restaurants and also owns the Sizzler restaurant brand.
Here are three reasons why I think the Collins Foods share price is a buy:
International expansion
Collins Foods has been steadily growing in Australia. Its revenue, earnings per share and dividend have all risen nicely.
However, Australia has a small population and there isn't a huge amount of room for growth. But, management have recently set their eyes on expanding overseas. So far, Collins has only acquired a few outlets in Germany and the Netherlands but both countries offer huge potential with their much bigger populations.
Of course, there are many other countries in Europe and elsewhere that Collins could also expand into.
Defensive earnings
Fast food is a fairly defensive industry, we love to indulge whether the economy is going well or not.
In-fact, it's possible that some people are more likely to go to a fast food restaurant like KFC as a pick-me-up in bad times.
Fuelling growth
Collins is fuelling a lot of its growth from retained earnings each year.
It has quite a low payout ratio of 58.7%, which means the business is re-investing more than 40% of its profit to grow future earnings.
The more a business re-invests for future growth the better of an investment it will be.
Foolish takeaway
Collins is trading at 21x FY17's earnings with a fully franked dividend yield of 2.83%. I think this is a good price to pay for a solid, growing business.
