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I was talking to a smart restaurant analyst on Tuesday and asked him, "How expensive is too expensive for restaurant stocks?"
He said: "Expensive stocks can remain that way for far longer than the typical investment horizon."
Starbucks , Cheesecake Factory etc. were that way for years—always 'too expensive' but it worked out for investors.
Chipotle, BJ Restaurants , Buffalo Wild Wings are 'too expensive.' See above. Repeat."
This gets us to Chipotle and this recap of what I said on air Tuesday:
Its price rise of nearly 10 percent was based on no news—other than, perhaps, the long anticipated opening last week of the company's Shophouse Asian concept in Washington. (It got rave reviews.)
That single restaurant, with no other ones planned, in effect added $1 billion, or roughly 11 percent, to the company's market cap.
Is one restaurant really worth that much?
Investors hoping for a roll-out of thousands more obviously thinks so.
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