nextbigtrade
Stage Analysis Trader, Creator of Next Big Trade Premium Newsletter
Backblaze and JMKE are making new highs that look unbuyable, which often marks the best stocks early in a new rally. Holders sitting on profits are content not to sell, many would-be chasers are scared off because the stock already looks too high, and the move puts it on more radars until the fear fades, greed sets in and chasing picks up. x.com x.comÂ
Backblaze is among the weak small caps exploiting investor anxiety by claiming to benefit from the memory price surge; when a company lifts full-year revenue by just $4 million and its market cap jumps $100 million, something is wrong. x.comÂ
Jersey Mike's is a stock to avoid despite good sandwiches. The IPO is mainly insiders selling, the implied valuation is about $8 billion for a company that is not profitable, and most of the balance sheet value is intangibles. As @TMFJaguar notes, that is what has come to be expected from a private-equity IPO. x.com x.comÂ
Jersey Mike's looks expensive relative to its remaining growth runway, with far cheaper opportunities elsewhere in restaurants, food and consumer. It trades at 25x EBITDA with a maturing store fleet and leverage above 4x, and most of the IPO proceeds go to cashing out its private-equity owner. The chain is no Subway copy; it is a Subway killer, just priced too richly. x.com x.comÂ
