NEW YORK (Real Money) -- Tastes are fickle, and the market can quickly lose its appetite for the flavor of the month. This is particularly true of companies that sell familiar or popular products. People latch on to these companies, reasoning that if they enjoy the product, then the stock must also be great.
Many of you don't remember Boston Chicken, the precursor to Boston Market. For a short time, the stock was a stellar performer. On its November 1993 debut, the stock shot from $10 to $23. After all, it was a great concept -- a fast-food restaurant that sold chicken, but at the same time was vastly different and offered a superior product compared with its competitors. Boston Chicken seemed like a revolutionary concept 20 years ago.
By late 1996, the stock traded above $40. But two years later, its shares would be worth pennies and the company would file for bankruptcy, a victim of overly aggressive expansion.
While dining at Boston Market is still enjoyable, just as an occasional visit to Shake Shack (SHAK), diving into the food is not the same as diving into the stock. It's not to say Shake Shack is the next Boston Chicken. The two situations are very different. However, both are popular brands that became overstretched after their respective IPOs.
Shake Shack is unlikely to make the same mistake that Boston Chicken made in terms of expansion. In fact, the company only plans to open a total of 450 locations in the U.S. But with that ceiling on its locations, it'll be a long time before the company grows into its current valuation, and that's assuming nothing goes wrong along the way.