The increases in share prices for Chipolte, DinEquity and BJ’s restaurants have risen substantially compared to the S&P 500 which has increased 6% percent for the year:
Tuesday 2010
Chipolte Mexican $212.86 141%
DineEquity $45.84 89%
BJ’s Restaurants $35.13 87%
Ruby Tuesday $12.57 75%
Denny’s $3.15 44%
The ratings health of this sector has seen some improvements this year from S&P, which upgraded restaurants’ credit ratings twenty-one times and downgraded thirteen times so far this year. I’m definitely surprised by the strong Chipolte gains – I know that Ruby Tuesday implemented a multi-million dollar design upgrade to its locations within the last few years, and although the ambiance in Chipolte locations is pleasant I never factored in all the times I walked by the stores and would see people eating in their establishment. But I’ve missed out before – and I’m not tempted to get on this bandwagon.
The lesson here is that all these folks who claim to be experts didn’t know about any of the severe market drops over the last ten years and I haven’t heard any of them say you can make high-returns in the 2010 stock market environment as easy as buying the shares of these companies. But, even with these high-returns if you gambled as a long-term investor you still may not be at break-even in portfolio value due to losses over the past ten years (plus inflation) or simply due to the last two years of stock market decline. Are you sure you still want to gamble?