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America’s favorite food – the hamburger – has a new favorite brand that also has a highly successful IPO. A Consumer Reports survey in July 2014 named Habit Burgers the best in the nation. Most Americans responded, “Who?” Today, a growing number of Americans know who Habit (NASDAQ:HABT) is, especially some very happy investors. All they want to know now is when is there going to be one in my town and where is it going to be?
Looking at Habit’s share price today is a good example of what happens when you stand too close to a masterpiece. You can see the brush strokes, but you miss the picture. Its share price has dropped nearly 6% on its second day of trading. If your first reaction to that news is that this sounds a lot like Facebook (NASDAQ:FB), you would not just be wrong, you would be really wrong.
The fact is that Habit priced its shares at $18.00 on Wednesday evening, $2.00 higher than it had originally expected. It then went on to close at $39.64, an increase of nearly 120% on its opening day. So, a 5.24% decline on the second day still prices the shares at $37.48 and still more than double its original price. Even it you acquired Habit shares early yesterday when it had reached $30.00, you’d still be up 25% on your investment.
Habit’s IPO raised more than $90 million. That’s not bad for a chain that is primarily located only in the western states of California (its home state), Arizona and Utah.
Habit has been “in pursuit of a new standard for freshness” since 1969, promoting a theme of “RESPECT the BURGER.” When you realize that this virtually unknown small, fast-casual chain has taken first place in a survey run by the highly-respected Consumer Reports, you may wonder how its big brother fared. That would be McDonald’s (NYSE:MCD). In the customer survey, MCD came in dead last.
As Americans are turning their attention to a healthier lifestyle, and as the trend away from traditional fast-food to fast-casual food gains moment for consumers and investors, expect more and more people to make a habit of investing in Habit . . . and Chipotle and El Pollo Loco and Five Guys. The longer you take to think about it, the more likely you are to be one of those people who used to say, “I wish I had invested in McDonald’s when I had a chance.”
