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I've been eating at Chuy's for a long time now. Their brand of high quality tex mex has appeal far beyond Texas, and they should be able to triple their restaurant count without too much trouble. The IPO paid off a lot of debt, which will free up a fair bit of cash for future expansion. Despite my optimism, there are three cautions here:1) A private equity firm holds more than 50% of the stock but is locked out from selling for the first 180 days. Will they cash out after that?2) Rising ingredient costs may put the squeeze on profitability, slowing expansion.3) They've taken on a fair bit of debt in the past (which they paid off with IPO cash). Will they fund expansion from growth going forward, or lever up?All that said, I'm optimistic about the business.
I have them on my watch list, but I think they will come back down to earth after the "new" wears off, and we have a really bad market day.
In my blog I said I would not buy the IPO, which I did not. Looks like it would have been a good deal for the short term.
Will continue to watch and see how they execute before I buy any for real.
I think they could be a good long term investment if they execute well, but a little early for real money, which is what all of my picks are.
JMO and worth exactly what I am charging for it.