In short: New pro pick #3 — and by his own admission not a JF sector. The rationale is stated as a rule: "I love buying companies that are growing at a fire sale." The growth is decomposed: "17% store count growth plus the 5 to 7 sales per store. You're now north of 20% growth for this company" — with food only now being introduced ("it's not even everywhere yet, so I think it's three items") and a base so small "they're going to double, triple, quadruple the size of their company over many, many years." He concedes the multiple immediately — 42x PE, "expensive. Yeah, I agree. It's just a restaurant" — and then prices it relatively: "Starbucks is at 34. Starbucks is not growing," Cava, "a new like Chipotle equivalent," trades at 92x and Shake Shack at 52x, and "normally in US this type of growth people pay way more." The closing arithmetic is the whole pitch: "if it grows at 20% a year, it means it will double in about three and a half years. So the 42 in three and a half will be 21."
A drive-thru coffee and energy-drink chain, and by his own admission not the kind of stock people expect from him. The rule behind it is one he states plainly: "I love buying companies that are growing at a fire sale."
The growth has two independent engines that add together. The company opens about 17% more stores each year, and the stores it already owns sell 5-8% more than they did last year — which puts total growth north of 20%. Food has only just been introduced and is not yet in every location, so there is another leg still to come, and the store base is small enough that the chain can plausibly double, triple or quadruple over many years.
The price is 42 times earnings, which he concedes is expensive — "it's just a restaurant." The defence is comparative: Starbucks trades at 34 times and is not growing at all; Cava, a fast-casual chain, trades at 92 times; Shake Shack at 52. And the arithmetic of growth does the rest. If earnings compound at 20%, they double in about three and a half years — so today's 42 times becomes an effective 21 times on the earnings the company should be producing by then, without the share price moving at all.
51:08Is that the opportunity? — Yes. Again, it's my style, right? This company is growing. Okay. So I love buying companies that are growing at a fire sale. So — store count growth 17% a year. — They're a very small company. They're going to double, triple, quadruple the size of their company over many, many years.
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