Guzman Y Gomez: It’s not just the burritos that are expensive, so is the stock!

Marc Kennis Marc Kennis, June 21, 2024

The Guzman Y Gomez IPO was a success, but the stock is expensive

Stuart Roberts from Stocks Down Under gives his take on the newly public company, Guzman Y Gomez (ASX: GYG). He admits to being a patron himself but expresses concern over the company’s high valuation, comparing it to Domino’s (ASX: DMP) and highlighting its pricey quick service restaurant format. Despite the restaurant chain being well-executed, Stuart considers it overpriced, and anticipates more decline after an initial drop of 5%.

Stuart further discusses the vulnerability of the company in the face of consumer shifts like those seen with Domino’s (ASX: DMP). He remarks that cost of living pressures can redirect customers to long-standing reliable outlets such as McDonald’s. Stuart also feels sceptical of Guzman’s (ASX: GYG) high-growth projections given their current climate of consumer sentiment and living costs.

 

Better value in Life Sciences

Lastly, Stuart brings attention to Botanix Pharmaceuticals (ASX: BOT), a company he finds lacks the recognition it deserves despite its FDA approved drug for an underserved medical condition. He encourages investors who profited from Guzman (ASX: GYG) to consider investing in Botanix Pharmaceuticals (ASX: BOT). Despite acknowledging the potential for Guzman’s (ASX: GYG) success, as was the unexpected case for Starbucks years ago, Stuart maintains his reservations about the company’s valuation.

Watch the full interview here!

 

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