Is Shake Shack's Major Growth Priced In? Buy the Dip Opportunity
One of the main questions that investors ask themselves when coming up with investment ideas is whether their bull case is already priced into the stock. If it is, then the upside to be had becomes relatively small, even if the thesis turns out to be correct.
Shares of Shake Shack Inc. (NYSE: SHAK) have been on a tear this year, as their year-to-date performance will measure an astonishing 60.7%, outperforming the broader S&P 500 index by as much as 42.7%.
Some investors are worried that any further growth prospects in the business may already be priced in with this massive rally. However, the company's financials reveal a few fundamental tailwinds that are not reflected in the company's stock price. Analysts still see some upside, and markets are placing high expectations on the stock.
Dip After Earnings Beat... Buy?
Markets have their way of bringing about surprises; in the case of Shake Shack, an unexpected pullback of 17% acts as the latest head-scratcher for shareholders. Despite reporting a roughly 50% beat on earnings per share, bears have overwhelmed other investors in beating the stock down.