Hi folks, I suggest those of you who are buying RAIN now or considering buying it take a good look at the new "Rainforest vs Watermarc" and the Watermarc threads. RAIN has made a spectacular move, a ten-bagger in the past 18 months alone. It's very well-followed and richly valued. I'm sure you would have done much better to get in 18 months ago than to buy now.
Doesn't it make more sense to buy into a fairly well-developed turnaround situation in a virtually unknown stock which plummetted the past few years, and has just begun to turn? Watermarc is growing company with excellent management, and with many fundamentals (such as price-to-revenues and book value) far superior to Rainforest. The management that got hold of the company two years ago had dramatic success with previous turnarounds, and is doing a great job with Watermarc. The company is just now beginning to move into profitability, beginning to hit about break-even. They would have gotten profitable already, but they've been plowing their operating earnings into rapid expansion of more restaurants. I'm amazed this stock went as low as it did and has taken this long to turn.
It's important to recognize the difference between a great company and a great stock. I think Rainforest is a great company, but by many measures it is a very expensive stock. Watermarc is becoming a very good company, and I feel the stock at current valuation is sensationally undervalued, i.e., great.
I'll close with a question about two rapidly growing restaurant companies: which stock has more growth potential, the one with a market cap of $10 million or one approaching half a billion? |
