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A Hungry Man's IPO Wish List

NEW YORK ( TheStreet) -- It's IPO time again, and there's more excitement around some of the new public offerings than I've seen in years.

Admittedly, the Facebook (FB - Get Report) IPO, the granddaddy of them all, did not thrill me, and my opinion has not changed now that it has been public for two months.

But seeing Five Below (FIVE - Get Report) hit the markets yesterday was exciting. Here's a name that I can understand, a store that I frequent with my kids, and one of those unique businesses that has been on my wish list of companies I'd hoped would ultimately go public.

But it's already off to the races, and already expensive. The stock soared yesterday, finishing at $26.50, nearly 56% above the offering price. That puts the current market cap in the $1.4 billion range for the 199 store chain, which generated $297 million in revenue for 2011. Five times revenue is pricy.

Five Below does have bold expansion plans for up to 2,000 locations, 10 times the current store-count. This is one that I'll be watching; its' a great concept that would no doubt have consumed some of my lawn-mowing, dish-washing and paper-route earnings had the chain existed during my youth.

It's too rich for my blood following the IPO hype, but I'll be following the name, its progress, and potentially looking for an entry point. The problem is I'm a value investor, and that means that I'm cheap.

In a perfect world, there are several other companies that I'd love to see go public. This is a wish list that will probably never be fulfilled, but here it goes anyway.
  1. Chick-Fil-A. With more than 1,600 stores in 39 states, Chick-Fil-A has done wonders with chicken sandwiches and waffle fries. It is estimated that the company had $4.1 billion in revenue for 2011. I didn't know this chain until my college days in the late 1980's, but now it is a frequent destination. It probably has the best milkshakes of any fast food chain.
    The company also marches to its own drummer and is not open on Sundays, which I greatly admire. I admit sitting at the drive through a couple of times on Sundays wondering why no one was taking my order. Owned by the Cathy family, I'd be surprised if the company ever went public, but I can dream.
  2. Trader Joes. A unique specialty grocery store chain, Trader Joes has more than 360 stores in 35 states and Washington D.C., with a large concentration in California, where the company was founded and is headquartered. It sells a wide variety of food items, including fresh fruit, meat, frozen foods, prepared foods and baked goods -- many with a healthy twist.
    In some states, stores sell wine and beer, and the company has become well-known for selling Charles Shaw wines, also known as "Two buck Chuck." The closest store to us is about 20 miles away, but it is a favorite in my household. The company is currently owned by the family of one of the founders of the Aldi grocery-store chain.
  3. In N Out Burger. A California fast-food staple founded in 1948, this is a must-stop destination for me when I'm on the left coast. The menu is pretty much limited to burgers and fries, but everything is fresh, and it's always good. There are 278 locations in five states -- California (210), Arizona (28), Nevada (16), Texas (15) and Utah (9).
    I've frequented the Pasadena location while attending the Value Investing Congress several times and been amazed at the length of drive-through lines -- and just how long Californians will wait for a burger and fries. This chain would play out very well in the East, but I don't believe that there are any plans for an eastward expansion.
    I'm very curious as to the company's total revenue and what the margins look like, but I imagine they'd both be solid. I hope to find out. Someday.

IPO fever is back, and a guy can dream, can't he?

At the time of publication, the author had no positions in any stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.

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