Noodles & Co. eating up gains

2nd July 2013 No Comments

stocksNoodles & Co. has been on a great run lately, with the casual dining center’s stock rising in a big way, especially last Friday. On Noodles & Co.’s (NDLS) first public trading day, the company’s stock over doubled in price. By today, it’s up another 25%, and it seems like everybody and their proverbial mothers are getting behind it in a big way.

That group even includes CNBC’s Jim Cramer, the colorful (or, depending on whom you ask, annoying) host of Mad Money, who has given his opinion on thousands of stocks and become a personality who can absolutely make a stock swing upward or downward almost all by himself.

What did Cramer have to say about Noodles & Co.? He gave it a vote of confidence while comparing it to another, very similar success story that we’ve already seen- Chipotle (CMG). Of course, while Cramer is a fan of the stock right now, he was conservative in saying that viewers should wait for a slight drop before buying to maximize their value.

Noodles & Co. would love to be on par with Chipotle in the next few years. Chipotle, after all, also doubled its IPO price the first day it was publicly available. Now, not even a decade later, the price is over sixteen times its original value.

The two companies have more in common than just the success of their stocks on their first day of public availability. Noodles & Co.’s CEO, Kevin Reddy, was once the chief operating officer of Chipotle. Other executives, such as president Keith Kinsey, have also had high-ranking roles within Chipotle.

For those who are unfamiliar, Noodles & Co. offers plenty of different dishes, from Pad Thai to simple fare like mac and cheese (yum, mac and cheese).

So, what’s the play here? Some believe that the bubble will burst before long, but were those the same folks that said similar things about Chipotle? IPOs always bring a certain amount of interest, and it’s understandable to think that the interest will be fleeting (along with the stock prices), but Chipotle provides a really good precedent and does engender a certain optimism. The quality of Noodles & Co.’s corporate structure also gives you reasons to believe.

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