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NEW YORK ( TheStreet -- Hungry for a tasty stock? One with some growth? Something with name brand recognition? Prepare your appetite -- a buffet of restaurant IPOs is soon to be served.
"We're on the front end of the curve," says Chris Sciortino, Managing Director on Baird's Consumer Investment Banking Team. "The spring has the potential to be the first inning of a restaurant burst."
Dividend Growth Reveals the Path to Profits >>Ignite Restaurant Group will kick things off next week with a $75 million offering planned for May 11, pricing in the range of $12.00-$14.00 a share. The 122 Joe's Crab Shacks and 16 Brick House Taverns are the two chains that make up the Ignited Company. Ignite's restaurant sales have increased for 15 consecutive fiscal quarters and outperformed its peer group. From 2008, when the chain assembled its current management team, revenue increased from $273 million to $405 million. The net income increased from a loss of $3.2 million to a net income of $11 million.
I love Joe's Crab Shack. It's cheap, it's fried - what's not to love. I've also given "Shack" gift certificates, so I'm a fan even before looking at the numbers and that's why these stocks do well. People like me enjoy the product and that translates to some savory opportunities.
Year-to-date consumer stocks have raised $600 million and enjoyed on average a first day return of 53% and have an average total return of 64% according to Renaissance Capital. One reason this new crop of restaurant stocks is expected to do well is because of their growth potential. "Many of the publicly traded restaurants have reached or are nearing maturation, which creates demand for a new set of growth assets in the public arena," said Sciortino.
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Other restaurant names in pipeline include three Texas food chains -
Chuy's Mexican Food,
Dave & Buster's and
Del Frisco's Restaurant Group. Chuy's had an annual growth rate of 36% for 2011. The food is tasty tex-mex and is reasonably priced. I've eaten at Chuy's in Dallas and Houston and I wish there was one in New York (although it probably wouldn't be as cheap). The chain plans to add 35-40 stores over the next five years. The proceeds will be used to get its debt under control.