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Non-Tech : RAINFOREST CAFE -- Ignore unavailable to you. Want to Upgrade?

To: RealTime who wrote (4276)	6/5/1998 3:34:00 PM
From: dougjn	Respond to of 4704

Sure, its very simple. Rain has very good profit margins at each of its units. Its no house of cards. Its had very strong growth, based entirely on opening new units, and that growth should be sustainable at the mid 30% rate for several more years, at least. It is selling at a low multiple given that growth rate. The issue of concern is that same store sales have declined -- but for reasons the company has clearly elucidated, there is nowhere to go but down after its typical first year phenomenal long lines successes. If sales declined from the second to the third year to any significant degree, yes that would be an area of concern. Also given the very strong margins the company enjoys relative to other restaurant chains, there is much less to worry about with some declines after first year blowouts. Rain is very different from the profitless (and indeed loss making) revenue growth of a Boston Market, for example. Nonetheless, that and other examples of profitless growth in the sector have hit the multipe. I don't know if the multiple is likely to expand. Perhaps not much. But from here it probably won't contract much either. And 40-30% growth with earnings looks pretty good to me, esp. in a fairly low PE stock. Doug

To: RealTime who wrote (4276)	6/5/1998 8:47:00 PM
From: Paul E. Koster	Read Replies (1) \| Respond to of 4704

I plan on holding on to my initial investment until a predicted "POP" just prior to the 3QTR earnings. If this holds true, I can leave with a small profit. I will leave my remaining free shares (from splits) to do whatever, since they were free. I've been in this stock for quite some time and I see better opportunities for my hard earned money. It's too bad that WallStreet has lost faith, but they have good reasons. I've watched the stock rocket-up and crash several times. It's a hound! Bow Wow PK