BY MARK SEBASTIAN
September 3, 2024
REPLAY
Trade Idea Located Here
In The Announcements Section
Let me start by explaining how good the food is here….yes…portillos is famous for Italian Beef….but it’s not just that. Lauren at Big Blonde Hair will tell you…and this is a direct quote:
“This is not just a good Fast Food Chopped Salad…you would be hard pressed to find a better chopped salad at a sit down restaurant”…end quote.
The Hot Dogs deliver…the deserts are amazing…and the ribs and pasta are pretty good too. Personally I always get a dipped Combo with Sweet Peppers….
This is an Italian Beef Sandwich with an italian sausage inside and sweet peppers on top that is than dipped in Au Jus….simply the best.
Now les look at the numbers…Portillos has a PE of 33 and a market cap of 930 million dollars.
CMG: 55, 77 billion
WING: 127, 12 billion
Cava Group (inferior salad to PTLO) 327, 13.5 billion
Lets dig into Cava group because the metrics arent that far off.
Cava has revenue of 845 billion dollars and a net income of 42.6 billion, PTLO revenue of 702 million dollars and a net income of 23.18 million dollars.
PTLO does have a little bit of debt…but nothing that would really matter…
It appears the only difference between Cava and PTLO is cache…and IMO one is a buy and one is not (full disclosure I own PTLO stock).
For 12.40 a share Ill take a bet on that PE getting up to 50 as some of the Wall Street people get a real taste of what this Chicago chain is dealing.
It has recovered off the bottom when it was below 10…can it get legs…Licia will break down the chart…
Not only are the beef sandwiches incredible, but the chocolate cake is divine.
Portillo’s (Ticker: PTLO) is beginning to trade out of its funk:
It has been trading pretty much straight down since July 2023 from $24.21 to its low on August 5, 2024 at $8.66 (which created a doji by the way).
After a nice rally up to $12, $PTLO has been trading in a box range or consolidation.
Just this Tuesday it was breaking out of the range but reversed lower on Wednesday.
I still think $PTLO is primed to rally from here taking it to $14.37, and from there possibly $16 and then $18.
Support comes in at the bottom of that box range at $11.90.
I am bullish here in $PTLO and would use a close below $11.50 for my stop loss.
Now I am hungry.
PTLO’s volatility is tasty, much like the the Italian Beef with a sausage kicker
Leave it to Mark the Chicagoan to write the Portillo’s intro up top. I like the food a lot and I find it a great example of when a company does one thing well and then just rinse and repeat. I own shares in PTLO too. These last weeks I have been picking up calls.
Why? The calls are not too expensive. The difference here is that PTLO has not really caught the interest of bigger institutions and the meme crowd so realized volatility is relatively low. With PTLO around the 9s the 90 day realized vol touched low 50s which is not much for a $9.00 stock.
I think long term calls and call diagonals make sense.
PTLO is one of the few grown restaurant chains trading at just revenue. CMG trades at 7x revenues. Just plan for PTLO to be a steady mover with steady growth and I think a 10% gain in the stock price is an easy reach for 2024.
Out on Assignment
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Mark Sebastian
Founder & CEO, Option Pit
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