(Dunkin Donuts IPO article updates an earlier version.)
CANTON, Mass. (TheStreet) -- Dunkin' Donuts owner Dunkin' Brands is set to begin trading publicly on Wednesday and the IPO could fetch as much as $20 per share, but value investors may do better to look elsewhere for growth, according to one analyst.
"You rarely get a good deal in an IPO and seldom get good value," BGB Securities analyst Sam Yake told TheStreet. "I would rather look where no one else is looking for value."
Yake said at the intended range of $16 to $18 a share, the Dunkin' Donuts IPO is expensive, though he believed the offering will be successful because of the company's completely franchised business model. He conceded that the company 's capital needs "are almost nothing," and that it has a lot of growth potential considering its lack of stores west of the Mississippi River.
"But how much it's worth and how much investors are willing to pay for it" will be up to individual investors, he said. It could be considered cheap for those who view Dunkin' Donuts' growth potential on par with restaurant gems like Chipotle Mexican Grill (CMG), Panera Bread (PNRA) or Buffalo Wild Wings (BWLD), Yake added, but as a value investor the analyst prefers other names which he says have "superior growth prospects." Chief among them: AFC Enterprises (AFCE). Yake said the operator of Popeye's fast-food chicken restaurants can be bought at "much cheaper multiples than Dunkin' Donuts," though he maintained that he does not absolutely think Dunkin' Donuts is a bad investment at the expected IPO price.
"Investors may be right to pay [for pricey multiples of Chipotle, Panera or Buffalo Wild] because they're great companies, but I tend to be more a value investor," Yake said.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV